New Jersey taxes are already among the highest in the country. The state boasts the highest property tax rate, the 8th highest gas tax rate, and the 5th highest state income tax rate. However, Governor Murphy now wants to raise more state money in the form of taxes.
Barely two months in office, Democratic Governor Phil Murphy is proposing a few New Jersey taxes that are leaving some residents scratching their heads. The first is a tax on high-income earners.
Under the Governor’s proposal, New Jersey residents would pay a new 10.75% marginal tax rate on any income above $1 million. The top tax rate is currently 8.97% for income over $500,000.
“Yes, a millionaire’s tax is the right thing to do — and now is the time to do it,” the governor said.
The governor believes this measure would raise $765 million this year.
Increasing Sales Tax
The state sales tax decreased from 7% to 6.875% on Jan. 1, 2017, and to 6.625% this January. Governor Murphy is also proposing returning the state sales tax back to 7%. The reduction was part of a deal that was meant to offset the sting of a recent increase in gas taxes. However, the governor believes reinstating the tax will do more good than the reduction.
“Let’s be honest, the impact of the three-eighths of one percent sales tax decrease has been nearly imperceptible to the average New Jersey family, but it has directly impacted our ability to provide services to and greater future investment in that same family.”
Other proposed New Jersey taxes include an increase in corporate tax rate, a tax on ride-sharing providers such as Uber and Lyft, and closing a loophole that allows hedge funds to pay relatively low capital gains taxes on their profits.
What’s With All The New Jersey Taxes?
New Jersey has one of the highest costs of living in the country. The state is currently facing a financial crisis and is struggling to pay debts. New Jersey is one of several high-cost states which are having serious financial troubles.
In general, there are two ways to balance the state budget: cut spending or raise taxes. Governor Murphy is opting for the latter. Much of New Jersey’s spending is tied up in health, human services, and state pension plans. Cutting spending in these areas is not desirable for any politician.
Time will tell whether Governor Murphy’s proposals become reality, however it is likely they will be passed with a few modifications. Residents, however, are feeling the sting.
“I can’t afford to live here anymore,” one resident said. “When I retire, I have to leave.”
Leaving New Jersey Taxes?
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