Phil Murphy's spending would raise N.J. taxes $1.3 billion. Here's who'd get soaked.

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Both the high and the mighty should prepare to pay more under Murphy's plan to tax the rich and weed-smokers.

TRENTON -- After months of promising to fund all sorts of state spending programs, Democratic nominee for governor Phil Murphy on Friday finally detailed how he plans to pay for them: A $1.3 billion tax hike.

Who pays for that 4 percent jump in spending? In short, the high and the mighty.

The state's wealthiest will pay more in income tax, corporations would see tax loop-holes closed, and marijuana smokers would see their drug of choice become legalized -- and taxed.

According to a Murphy spokesman, the proposed tax increases would raise roughly $1.3 billion a year, with a separate $80 million to $100 million generated by reforming public workers' health plans to shift more out-of-network costs onto state employees.

The new tax revenues Murphy is seeking would represent nearly 4 percent of this year's $34.6 billion budget, a Murphy spokesman confirmed Friday morning.

The Murphy campaign's spokesman, Derek Roseman, also stressed the spending plan, first reported by the Observer, would not include a new transit tax that the candidate had been mulling, nor would it repeal cuts in the state sales or estate tax made under Gov. Chris Christie.

Murphy outpacing Guadagno in campaign fundraising

Republican nominee Kim Guadagno, Christie's lieutenant governor, has promised to provide a $1.5 billion in property tax cuts by giving homeowners paying more than 5 percent of their household income towards school taxes a credit of up to $3,000. She says she would wring $250 million in savings from an audit of state government, find $500 million from adjusting state aid to "overfunded districts" and get $1 billion from "annual revenue growth." 

Under Christie, Trenton has consistently underfunded state workers' pensions and health benefits and has suffered 11 credit rating downgrades from Wall Street rating agencies, which in turn make it more expensive for the state to borrow money.

The Republican governor has vetoed  five Democratic attempts to institute a "millionaire's tax." 

But Murphy's plans would embrace such a hike. The most recent Democratic proposal in the Legislature would have ratcheted up the marginal tax rate on those earning more than $1 million from 8.97 percent to 10.75 percent.

Such a tax would raise $600 million, according to a Murphy spokesman in the Observer report.

Meanwhile, some of the corporate loopholes exploited under eight years of Christie would face the chopping block:

  • Murphy would raise $290 million in his first year in office by closing a tax loophole that allows corporations to shift profit made in New Jersey to lower-taxed states, an idea based on bill introduced by state Sen. Raymond Lesniak (D-Union) that cleared the Senate budget committee last October, but was never put up for a vote.
  • He'd also soak well-heeled Wall Street hedge fund managers by taxing "carried interest," the performance fees earned by private equity managers, to generate $100 million a year.

There's also some hikes for the not-so-rich. Between $80 million and $100 million in new revenue would be raised by realizing lower out-of-network health care costs by making state workers on public health plans pay more for them.

It won't just be the "mighty" who'll pay more -- the "high" will pony up, too: Murphy aims to collect $300 million from legalizing and taxing marijuana.

However, not all of Christie's tax cuts would be reversed.

Murphy doesn't plan to reverse Christie's small decrease in the state sales tax that began taking effect at the start of this year, nor does he have plans to re-introduce the estate tax that Democrats signed off on.

Under Christie, the state sales tax dropped from 7 percent to 6.875 percent on and after January 1, 2017 and will decrease to 6.625 percent on January 1, 2018.

As of January, the New Jersey estate tax exemption increased from estates valued at $675,000 to $2 million.

Claude Brodesser-Akner may be reached at cbrodesser@njadvancemedia.com. Follow him on Twitter @ClaudeBrodesser. Find NJ.com Politics on Facebook.

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Article Phil Murphy's spending would raise N.J. taxes $1.3 billion. Here's who'd get soaked. compiled by Original article here

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