Tuesday, 26 Nov 2024

New Jersey Governor Pushes ‘Millionaire’s Tax’ as His Party Tilts Left

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TRENTON — Gov. Philip D. Murphy of New Jersey, a Democrat who won a decisive victory two years ago by promoting a progressive agenda, wants to raise the income tax on those making more than $1 million to help pay for what he says are some of the state’s most pressing needs, including expanding preschool.

His proposal is similar to the plan he pursued last year, which set off a confrontation with the Democratic-controlled Legislature that nearly shut down the state’s government and led Mr. Murphy to accept a compromise that raised taxes on a smaller pool of the wealthy.

But now the national conversation is much different: Progressive Democrats, including several candidates for president, have shifted the party to the left, arguing that taxing the wealthy will not only address growing income inequality, but will help pay for expansive social programs like Medicare for all that are priorities for the party’s more liberal wing.

Senator Elizabeth Warren of Massachusetts has proposed an “ultramillionaire’s tax” that would impose a 2 percent tax on a household’s assets over $50 million, and an additional 1 percent on those exceeding $1 billion. Senator Cory Booker of New Jersey has called for imposing a surtax on estates greater than $10 million.

And Representative Alexandria Ocasio-Cortez, the progressive congresswoman from New York, has promoted a 70 percent tax on those making over $10 million.

“The debate over income inequality is at the core of the Democratic Party, more so now than ever,” said Stephanie Cutter, who was the deputy campaign manager for former President Barack Obama in 2012. “The solutions to deal with that are broad, but at the end of the day, it comes down to making investments in the middle class, and those trying to get there, by raising taxes on those at the very top.”

Yet in New Jersey, despite Mr. Murphy’s liberal agenda and the decidedly Democratic tilt among the electorate, there has been strident opposition to any new taxes, even among members of the governor’s own party.

The two Democratic legislative leaders, Stephen M. Sweeney, the Senate president, and Craig J. Coughlin, the Assembly speaker, have been adamant that they will not embrace new taxes without significant reforms in spending.

The looming showdown reflects the difficulty in turning campaign idealism into policy, particularly in a tax-weary state like New Jersey.

“Those at the very top are shouldering less and less of their fair share of the tax burden,” Mr. Murphy said in his prepared remarks. “That’s the opposite of tax fairness. Let’s work together to apply the millionaire’s tax to every millionaire. By doing so, we can do more to relieve the burden on middle-class taxpayers and senior citizens who are taking it on the chin from the Trump administration’s tax scam.”

A Rutgers University poll just after Mr. Murphy’s election in 2017 found that nearly two-thirds of state residents favored a tax on those making over $1 million. But that was before the fallout from President Trump’s federal tax law hit the state, most significantly by limiting the deductibility of state and local taxes.

Only three states in the country, as well as Washington, D.C., have taxes that target those making more than $1 million; California, Connecticut and New York adopted a so-called millionaire’s tax during the recession a decade ago.

New York Mayor Bill de Blasio favors raising the tax, but Gov. Andrew M. Cuomo has said that it would have virtually no chance of passing in the Legislature.

Mr. Murphy had hoped to build on the momentum of his 14-point victory in 2017 and the Rutgers poll results when he called on raising taxes on the wealthy last year. But after opposition from Democratic legislators brought New Jersey to within hours of a government shutdown, a compromise was reached to raise taxes on those making over $5 million.

That tax raised $216 million last year, according to the state’s Department of Treasury. This year, Mr. Murphy said, expanding the tax to those making more than $1 million would bring in $447 million in new revenue, helping pay for priorities like improving New Jersey Transit, the state’s sputtering public transportation network, and paying down the state’s enormous public pension obligations.

But with the 80-member Assembly up for election this year, many Democratic lawmakers are wary of angering voters by pursuing yet another tax.

“I will insist on not having any new taxes in the budget,” Mr. Coughlin said in January during a radio interview.

But progressive activists in New Jersey are vowing to make the millionaire’s tax a campaign issue this fall.

“I think that any legislator who is running on taxing the rich will energize their base,” said Robert Duffey, the interim executive director of the New Jersey Working Families Alliance, a progressive group. “Any legislator who would rather carry water for millionaires than working families will run into real trouble around election time.”

In the Senate, Mr. Sweeney, who had initially supported a millionaire’s tax before reversing course, has been adamant that he will not agree to new taxes without significant changes to spending — such as reducing public worker benefits far more than Mr. Murphy is proposing, and consolidating municipal police and fire departments and school districts.

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