New Jersey fiscal governor says no more
Like an addict finally entering rehab, New Jersey Gov. Phil Murphy has vowed to chill out on tax increases. This is not a parody of Babylon Bee. The most demanding governor on this side of Illinois said Tuesday during a campaign debate that “I pledge not to raise taxes” in a second term.
This conversion on the way back to Trenton was such a shock that the debate host literally thought she had misheard. “Yes you will raise taxes? âABC’s Sade Baderinwa replied after Murphy’s remark. He reiterated the commitment to no new taxes.
No addict will have a harder time with their 12-step sessions. He campaigned in 2017 for a tax hike. In 2018, he raised New Jersey’s highest corporate tax rate to 11.5%, the highest in the country. Last year he raised the maximum rate on income from 8.97% to 10.75% and extended the corporate surtax.
The Tax Foundation says New Jersey has the worst tax climate in the United States, and homeowners pay an average of more than $ 9,000 a year in property taxes, according to the Department of Community Affairs.
Mr. Murphy thought it was a virtue. Describing the state’s fiscal climate in 2019, he told voters “if this is the only basis on which you are going to make a decision, we are probably not your state.”
Why swear to forgo tax increases now, beyond the obvious reason he is running for re-election in November? It is not because the governor suddenly discovered fiscal chastity. The state will spend $ 45 billion this year, up from $ 37 billion when Murphy became governor in 2018. Its February budget for 2021 increased spending by $ 3 billion.
He can afford to be limited on taxes now, at least for a while, because New Jersey is rolling in the money. The state received $ 6 billion in Covid aid from the federal government, not including Covid payments to New Jersey residents and businesses. And like in most states, New Jersey incomes grew as the economy recovered amid a rising stock market that rejected capital gains and produced a budget surplus.
Will the governor keep his fiscal commitment? Maybe if the good times of income keep rolling. But it also incorporated new spending obligations that will increase over time, and the tax base shrinks as more taxpayers flee. The 2020 National Migration Study ranked New Jersey as the top state for net departures. Respondents ranked taxes and the cost of living as their top concern.
Sooner or later the state’s public unions, the real leaders of Trenton, will be asking for more pensions, higher wages and more contributing employees. We bet on a relapse.
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Appeared in the October 1, 2021 print edition under the title “The Taxing Governor Says No More”.