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NJ Progressives: 5 Reasons Why Millionaire Tax Is 'No-Brainer'

Should New Jersey raise income taxes for people making over $1 million a year?

Patch — March 20, 2019

By Eric Kiefer, Patch Staff

A coalition of progressive activists in New Jersey are keeping the pressure on state lawmakers as they ponder the latest version of Gov. Phil Murphy's "millionaire's tax."

On Wednesday, a large coalition of New Jersey activists who call themselves Better Choices for New Jersey (BCNJ) released a statement in support of Murphy's proposed 2020 budget, which includes a tax on anyone making more than $1 million a year.

The proposal - a centerpiece of Murphy's campaign platform - was only partially enacted in fiscal year 2019 in an effort to avoid a budget shutdown. Last year, state lawmakers settled on a higher income tax rate for earnings over $5 million. But this time around, Murphy wants to extend the 10.75 percent rate down to earnings over $1 million, which currently are taxed at a rate of 8.97 percent, NJ Spotlight reported.

The governor's latest proposal would raise $447 million in new revenue, according to BCNJ.

According to Anne Songcayauon of New Jersey Working Families, instating a true millionaire tax is a "no-brainer." But Murphy's proposal has met with major pushback from state lawmakers... including those from his own political party.

The BCNJ stated:

"Democratic legislators passed a millionaires tax five times during the Christie Administration, but each time the measure was vetoed by the governor. Now, many of the same Democratic legislators have so far refused to back Murphy's proposed millionaires tax despite the fact that two-thirds of voters support the measure."

After Murphy gave his controversial budget address on March 5, several lawmakers threw water on his current version of the tax proposal.

Assembly Speaker Craig Coughlin, D-Middlesex, said he remains convinced "that we can achieve added substantial savings through reforms and that our fiscal solutions should not include any broad-based tax increase, including sales and income tax."

Some Republicans such as Assemblyman Anthony Bucco went even further, rejecting Murphy's second budget for "contributing to the state's unaffordability problem."

"The governor continues to peddle expensive programs that sound nice but carry massive price tags that the state has no ability to pay for - even as we sit on tens of billions of dollars in unfunded liabilities," said Bucco, R-Morris. "This misguided approach is why we continue to hear proposals in Trenton for higher taxes and state spending that will eclipse 11 percent in just two years."

Despite the criticism, many New Jersey progressives have continued the push for a true millionaire tax. Here are five reasons why it would be a good deal for the Garden State, according to a news release from the BCNJ.

NEW JERSEY'S 'INCOME INEQUALITY'

New Jersey ranks among the top 10 states for "income inequality," according to the latest U.S. Census data, activists said.

According to estimates from the United Way, more than 40 percent of New Jerseyans are among the working poor. Despite that, New Jersey's working families pay a greater share of their income in taxes than households bringing in $1 million per year, the coalition stated.

"In a healthy democracy, everyone pitches in and everyone shares in the benefits," said Sean Spiller, a Montclair councilman and vice president of New Jersey Education Association. "Unfortunately, all the benefits have been going to the rich while the rest of us have been the only ones pitching in."

Brandon McKoy, president of New Jersey Policy Perspective (NJPP), said that a millionaires tax would be an important step to improving economic and racial equity.

"After years of estate tax cuts, yacht tax cuts, corporate subsidies and federal tax cuts primarily targeted to the rich, New Jersey needs real tax fairness more than ever," McKoy said.

According to Ann Vardeman of New Jersey Citizen Action, New Jersey has one of the highest levels of income inequality in the country.

"The wealthy contribute a smaller share of their income in taxes than most working families do," Vardeman said. "The rich have been getting richer, and the poor have been getting poorer."

THE CURRENT TAX SYSTEM IS 'RIGGED'

"New Jerseyans understand that the current tax system is rigged against them and for the wealthy, which is why they overwhelmingly support a millionaires tax," Anne Songcayauon of New Jersey Working Families said.

The coalition said the current call for a millionaires tax comes after nearly a decade of tax cuts, many of which were targeted to "New Jersey's wealthy and well-connected."

New Jersey Policy Perspective recently estimated that former governor Chris Christie and lawmakers in both parties gave away $13 billion in tax cuts, including an estate tax cut, a yacht tax cut and $11 billion in tax subsidies to corporations through the state Economic Development Authority.

IT WILL HELP FUND VITAL PROGRAMS

According to NJPP senior policy analyst Sheila Reynertson:

"New, sustainable sources of revenue like the millionaire's tax allows property tax relief programs to keep up with the cost of living, offering meaningful support to seniors and those living on a fixed income. That in turn frees up resources to help New Jersey's neediest families by increasing the Work First NJ grant for basic assistance again this year. Renewable sources of revenue help lawmakers wean themselves off risky budgetary practices — like using the state surplus as a slush fund — that have contributed to 11 credit downgrades. It frees up resources for universal representation to help keep New Jersey families together in this age of extreme xenophobia. It helps fund the Earned Income Tax Credit increase, one of the most effective anti-poverty tools and recently found to be even more cost effective than originally thought. And, of course, sustainable revenue allows New Jersey to continue making critically important investments in state assets that all families rely upon every day like NJ Transit and institutions of higher education."

As an example, activists offered the example of benefits to the Clean Energy Fund.

"Even though this year's budget overall is better than last year's, we still need to stop these raids and cuts for vital programs that affect our land, our air and our water," argued Jeff Tittel, director of the New Jersey Sierra Club.

To get there, the state needs to make the wealthy pay their fair share, while also holding polluters accountable, Tittel added.

"Last year's temporary tax hike on the very rich helped bring down raids to the Clean Energy Fund by over 40%, but we need a real millionaire's tax and close tax loopholes for EDA money to finally stop the cuts and diversions," Tittel said.

IT'S WORKING IN OTHER STATES

According to the BCNJ, over the last decade, several jurisdictions have raised taxes on high-income households and are "doing well."

For example, California, Connecticut, Maine, New York and Washington D.C. have all adopted millionaire taxes to meet their needs. In California, a strong millionaires tax has helped correct the state's finances and allowed it to significantly expand mental health programs and reduce homelessness, incarceration and hospitalization, the coalition stated.

"Those who benefit from President Trump's tax cuts are not leaving the state and, if they stay, they need to pay their fair share," said Kevin Brown, vice president and New Jersey state director of 32BJ SEIU. "This sensible taxation will mean increased state revenues that will lift the lower and middle classes, making New Jersey a more affordable place to live for working families."

Reynertson of the NJPP concurred.

"Worry that wealthy taxpayers will flee New Jersey should be dismissed by peer-reviewed research findings, the vast majority of which show that raising the state income tax has a negligible effect on relocation decisions. The number of New Jersey taxpayers with incomes over $500,000 has consistently grown even as income tax rates on wealthy households have been increased twice. The share of these taxpayers grew an astonishing 450 percent, between 1994 and 2016, the most recent year for which data is publicly available. Millionaire tax flight is a myth, and that fact doesn't go away when lawmakers hear anecdotal stories from estate planners."

MOST RESIDENTS WANT IT, POLLS SAY

Perhaps the most compelling reason to consider a millionaire tax in New Jersey is the simplest... the majority of residents want it, activists say.

Polls have repeatedly found that upwards of two-thirds of New Jersey voters support raising taxes on people making $1 million per year, the BCNJ stated.

"Democratic legislators who can't get behind a millionaires tax are swimming against the currents of their own party, and defying the will of the voters who elected them in the first place," Songcayauon said.

Better Choices for New Jersey includes the following members: Action Together New Jersey, AFSCME New Jersey, Anti- Poverty Network of New Jersey, Amalgamated Transit Union/NJ State Council, BlueWaveNJ, Clean Water Action, Council of NJ State College Locals - AFT, CWA District 1, CWA Local 1032, Environment New Jersey, Essex Rising, Food & Water Watch/New Jersey Chapter, Health Professionals and Allied Employees, Healthy Schools Now, Housing and Community Development Network of New Jersey, Indivisible Congressional District 3, Indivisible Congressional District 5, Indivisible Cranbury, Indivisible Garden State, La Casa de Don Pedro, Latino Action Network, National Association of Social Workers/New Jersey, National Organization for Women/Northern New Jersey Chapter, New Jersey Citizen Action, New Jersey Industrial Union Council, New Jersey Policy Perspective, New Jersey Tenants Organization, New Jersey Work Environment Council, New Jersey Working Families Alliance, Organizing for America Essex, Our United Revolution New Jersey, People Demanding Action/New Jersey Chapter, Progressive Democrats of America/New Jersey Chapter, Save Our Schools March, Sierra Club/New Jersey Chapter, South Orange/Maplewood Dems, STAND Central New Jersey, Union of Rutgers Administrators/AFT Local 1766, V Rev. Peter Anthony Baktis( Mother of God Orthodox Church - Princeton), Westfield 20/20.

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