BY Christopher Lang, Correspondent, @topherlang2 | MonroeNow | Jul 2, 2018
TRENTON – Governor Murphy signed a $37.4 billion spending plan that would raise taxes on large corporations, residents earning more than $5 million and impose new taxes on industries that previously had not been regulated.
The budget was signed Sunday after the state constitutional deadline of Saturday at 11:59 p.m. The first-term Democratic governor was feuding with his own party, which controls both houses of the state Legislature, to reach an agreement on a new spending plan and avoid a government shutdown.
Murphy campaigned on raising taxes on the wealthy to help boost funding to education, transportation and other areas. However, those tax increases faced resistance from lawmakers worried about backlash at the polls, in a state where taxes are already one of the highest in the nation.
The budget would raise the income tax rate to 10.75 percent up from 8.97 percent on individuals making at least $5 million. It also includes a four-year increase in the corporate tax that Senate President Steve Sweeney believes will net some of the billions of dollars companies will save under President Trump’s federal tax overhaul adopted this year by the GOP-backed Congress. New Jersey businesses with a net income of at least $1 million will see their taxes increase 2.5 percent in 2018 and 2019. For 2020 and 2021, the increase will be 1.5 percent.
Murphy had originally wanted to increase the state sales tax from 6.625 percent to 7 percent, but as part of the agreement with Democratic leaders the measure was scrapped. Instead, however, new taxes were imposed on ride-share services and short-term rental booking websites. Companies like Uber and Lyft will face a 50-cent charge on rides and businesses such as Airbnb will have to collect sales taxes and other fees on transactions made through their websites, which are similar to those imposed on the hotel and motel industry. The short-term rental tax bill was approved by the Legislature Sunday and signed by the governor.
The budget increases the income tax deduction on property taxes by $5,000 up to $15,000. It also increases the funding for the homestead tax rebate program.
“Nothing, in any of their proposals, would stop the flight of New Jersey’s suffering families and employers to other more affordable states,” the Republican Senate Caucus said in a statement. “To the contrary, all of their plans would make that problem worse.”
The budget also maintains the Governor’s investment of $242 million for New Jersey Transit in addition to $402 million for education, including pre-K programs.
“This agreement will bring about strong and fairly funded public schools, modern reliable mass transit and more importantly, fairness for our working families and middle class,” said Governor Murphy.