New Jersey’s reputation for having high taxes may not be enough for Governor Elect Murphy to enact his campaign plans. “This year’s cuts include a slight reduction of the general sales tax, and the outright elimination of the estate tax.”
“The 2018 tax changes were triggered by a bipartisan deal that Gov. Chris Christie struck with Democratic legislative leaders in 2016, when they also agreed to increase the state’s gas tax by nearly a quarter.”
The tax cuts will dramatically affect New Jersey’s budget which is projected to lose $500 million in revenue and this could double to about $1 billion in the next fiscal year.
“With Democratic Gov.-elect Phil Murphy getting ready to replace the Republican Christie later this month, the impact of the tax cuts could put pressure on the new governor to eventually reverse them, especially if the fiscal projections he’s inheriting from Christie fail to come through.
This will be a challenge for Murphy who made many campaign promises that include significant spending. How will he increase spending on K-12 education and public-worker pensions and in other areas with decreased revenue? “He said he would raise new revenue and restore fairness to state fiscal policies, in part by creating a new top-end income-tax rate for earnings over $1 million of 10.75 percent that would raise an estimated $600 million in annual revenue.
So far, Murphy has not backed off that plan, even as some lawmakers have questioned whether it makes sense to pursue it after new federal-tax policies enacted recently by President Donald Trump and the Republican Congress will now prevent New Jersey residents from writing off their full state and local tax burdens.”