NJ Millionaires Tax Could Be Coming Back

Nov 27, 2017

New Jersey Statehouse

Governor-elect Phil Murphy wants to bring back a millionaires’ tax in New Jersey to provide more money for schools.

A state tax surcharge on millionaires expired in 2009, and Governor Christie vetoed several attempts by the Democrat-controlled legislature to enact a new version.

Richard Auxier, a research associate at the Tax Policy Center, says New York and California are the only two states with a separate tax bracket that begins at a million dollars of income.

“Having a progressive tax like this is a good way to raise revenue, especially in states where you have a lot of high-income residents. But there is the idea that you wouldn’t want to have your tax rates so high that it would discourage businesses and residents from locating and remaining in your state.”

Rutgers economist James Hughes says it’s hard to tell if imposing a tax surcharge on millionaires’ incomes would cause many of them to move out of New Jersey.

“Attorneys who have a lot of state contracts or municipal contracts, they’re certainly going to stay within the state. On the other hand, you may have very wealthy people who have a lot of non-work-related income, investment income and the like, who want to establish a residence in Florida and live in New Jersey part time.”

Jon Whiten, the vice president of New Jersey Policy Perspective, doubts the surcharge would cause a big exodus of wealthy residents.

“A small percentage of people move out, and any sort of lost revenue from those folks is more than made up for by the increased revenue from the people who stay.”

The millionaires’ tax could generate an estimated $600 million in annual revenue.