Updated: 6:20 p.m. EST
Gov. Phil Murphy is again calling for New Jersey to raise its income tax rate on millionaires, a proposal that was shot down last year by legislative Democrats as the state hurtled toward a government shutdown.
In his second proposed budget, which he announced Tuesday, Murphy suggested expanding the state’s highest income tax bracket of 10.75 percent to include anyone making more than $1 million per year.
Murphy predicts it would mean additional $447 million if the state expanded its highest income tax brackets.
“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,” Murphy said in his budget speech Tuesday.
The federal tax cuts legislation capped the amount of state and local taxes the filers can deduct, which hit the high-tax state of New Jersey especially hard.
Although Murphy floated the same idea last year, top Democratic lawmakers rejected it, landing instead on an increased income tax for those making more than $5 million.
The proposal sets the stage for another political showdown between Murphy and state Sen. President Steve Sweeney, D-Gloucester, who has vowed to block any new tax hikes without major structural changes to the state budget.
“You might not have to do tax increases if you can come up with efficiencies,” Sweeney said after Murphy’s speech.
Assembly Speaker Craig Coughlin also said he was not a fan of the millionaire’s tax.
But Sweeney, Coughlin, and top Democrats praised Murphy for striking a more conciliatory tone in this year’s budget speech, which could mean smoother budget negotiations in the coming months between the administration and the Democrat-controlled Legislature.
Still, Murphy’s proposal prompted immediate rebukes from top Republicans, who suggested the first-term Democrat focus less on tax hikes and more on confronting the ballooning costs of the state’s public pension system.
“Until you go there, you are, again, abdicating your responsibility to the taxpayers of New Jersey, especially the concerned property taxpayers of New Jersey,” said State Sen. Declan O’Scanlon, R-Monmouth.
Murphy said he didn’t resort to tax hikes alone, noting that the budget includes significant efficiencies that helped pare back overall spending.
“This budget is rooted in over $1.1 billion in real and sustainable savings — including nearly $800 million in public employee health benefit cost savings and another $200 million-plus in departmental savings,” he said.
Murphy also pushed for a new “corporate responsibility fee” on companies with more than 50 employees relying on Medicaid for health coverage. The Democrat hopes the $150 per person annual fine will reduce those companies’ reliance on public benefits.
The budget calls on the state to pay nearly $3.8 billion into the public pension system — its largest payment to date, but lower than what financial experts say is necessary — and aims to have a $1.16 billion surplus, which administration officials said would bring it closer to the national standard.
It would also increase funding for New Jersey Transit and funnel additional money into public education as the state transitions to a revised K-12 school funding formula.