NJ Faces Severe Budget Crunch; Some Want 'Billionaire Tax' – Others Demand Cuts

Could raising taxes on the richest people and corporations in New Jersey help the state cope with its long-running budget struggles? That’s what some advocates are pushing Gov. Mikie Sherrill to consider ahead of her first state spending proposal – although others are asking for cuts, instead.

Last week, Sherrill warned that New Jersey is facing a “serious structural deficit” that will force some tough choices during a news conference in Trenton.

“Let’s face it, for decades, previous administrations have allowed for business as usual in Trenton and failed to solve things long term,” Sherrill said, adding that there have been too many “one-offs and temporary fixes” over the years.

“So now we're staring down an estimated $3 billion structural deficit,” she said. “If we do nothing, our entire $7.2 billion surplus will be gone by the budget year that begins July 1, 2027, and we’ll be another $750 million in the hole on top of that.”

This would potentially trigger budget cuts on things like schools and pensions – and tax hikes for residents who already pay among the highest in the nation.

Sherill insisted that her administration is not planning to raise taxes on New Jerseyans, instead looking for “savings” to fix the state’s “historic spending problem.” Her administration recently released a policy blueprint that cites a plan to “boost revenues without new taxes.”

But according to some experts, cutting spending is only one part of the solution.

MAKE BILLIONAIRES PAY THEIR ‘FAIR SHARE’

“Fixing a deficit this size through cuts alone would seriously harm low-income residents and working families who depend on Medicaid, school funding and property tax relief,” nonpartisan think tank New Jersey Policy Perspective (NJPP) reported earlier this week.

“The governor’s budget proposal should ask the wealthiest individuals and corporations to pay their fair share,” the nonprofit suggested.

Two years ago, the NJPP released a study that says New Jersey would be able to raise an extra $4 billion annually if it jacks up taxes for super-wealthy corporations and residents, hikes its sales tax and reforms its tax code.

The report’s suggestions included tweaking income tax brackets, raising inheritance taxes, and increasing taxes on the sale of high-value homes. NJPP researchers also said it would be a good move to beef up enforcement by hiring more auditors.

What would an extra $4 billion a year do for New Jersey? According to the report’s author, that’s enough to enable all children to have free meals in public schools, restore state aid to schools that are being forced to cut staff and programs, and cover the entire shortfall in the state budget.

• See Related: NJ Can Raise $4B By Taxing The Rich And Hiking Sales Tax, Study Says

The idea of hiking taxes for the nation’s wealthiest has seen majority support in several polls, including in New Jersey.

Last year, the Pew Research Center found that 63 percent of U.S. adults believe tax rates on large businesses and corporations should be raised – with 34 percent saying they should be raised “a lot.” Meanwhile, 58 percent of people said tax rates for households earning more than $400,000 should be raised.

A recent study from PDFExpert.com found that a billionaire tax is the “most desired” new tax in New Jersey.

“Residents aren’t begrudging success; they’re simply asking whether those at the very top should take on a more visible share of supporting schools, transit, and public services,” researchers said. “In a densely populated state with big infrastructure needs, the math feels straightforward.”

In 2023, a Fairleigh Dickinson poll found that 54 percent of New Jersey residents supported an extra tax on businesses earning more than $1 million if it would be spent on improving NJ Transit – a fee that was later enshrined as a new corporate transit tax.

Meanwhile, New Jersey activists continue to demand higher taxes for the wealthy.

In 2025, a coalition of more than 40 unions, community organizations and advocacy groups sent a letter to former Gov. Phil Murphy and the state Legislature, calling for higher taxes on businesses to pay for health care, housing, education and transit.

“New Jersey families are already struggling with skyrocketing housing costs, unreliable transit, and rising prices for groceries and utilities,” said Eric Benson, coalition manager with the Advocates with the For The Many coalition.

“The wealthy and well-connected got the biggest handouts from Washington,” Benson said, referring to the controversial tax cuts instituted under the Trump administration.

“Now it's time for them to pay their fair share so we can protect the health care, housing, and services our communities need,” Benson said.

• See Related: NJ Activists Rally On Budget: ‘We Want Justice, Tax The Rich’

The concept has also found support from some progressive politicians and candidates in New Jersey.

Sherrill’s potential successor in the U.S. House of Representatives, Analilia Mejia, supported a billionaire’s tax during her recent campaign for the Democratic Party nomination in New Jersey’s 11^th congressional district.

“[Voters] want leaders who are unbought, unbossed, and ready to take our country back from the billionaires and MAGA extremists,” Mejia said after her victory in June’s primary election.

GOP LAWMAKERS: ‘NJ IS MOVING IN THE WRONG DIRECTION’

Other experts and lawmakers in New Jersey have taken the opposite stance, demanding that the governor’s office abstain from raising taxes on any person or business – wealthy or otherwise.

After Murphy presented his final state of the state address in January, several Republican leaders in the Senate and Assembly said that Sherrill faces an uphill battle to balance New Jersey’s coffers (watch video footage below).

“We’ve got a budget that has increased $22 billion,” Sen. Anthony Bucco argued. “We've got property taxes on average now today that are up over $10,000 a home. Unemployment taxes are up. Payroll taxes are up. More and more people in New Jersey are living paycheck to paycheck.”

“These are all things that should be sending a warning sign to us,” Bucco continued. “But yet last night, my colleagues on the other side of the aisle along with the governor signed a bill adding another $128 million to a budget that is already estimated to [have] a $4 billion shortfall.”

“That is all going to fall on the backs of the taxpayers,” he added.

• See Related: NJ Legislators OK $128M Spending Bill Criticized By GOP

In February, another Republican lawmaker, Assemblyman Christopher DePhillips, pushed the Sherrill administration to reduce the state’s “worst-in-the-nation” 11.5 percent corporate business tax and rescind the additional 2.5 percent corporate transit fee.

“Businesses that stay in New Jersey have to cut costs somewhere and unfortunately that is translating to job loss, because that is what they can control,” DePhillips said.

“The unemployment rate indicates that New Jersey is moving in the wrong direction and the only way to correct course is to cut taxes,” he said.

The New Jersey Business and Industry Association (NJBIA) has taken a similar stance on corporate taxes in the Garden State.

After Sherrill’s announcement earlier this week, the group said that the state’s business community applauds the administration’s “message of fiscal discipline.”

“The governor’s focus on responsible long-term budgeting, finding efficiencies and righting our fiscal ship without relying on more tax increases in an already overtaxed state is very welcome, appreciated and a necessary breath of fresh air for New Jersey taxpayers,” NJBIA chief government affairs officer Christopher Emigholz said.

• See Related: Raise Or Lower Business Taxes In NJ? Experts Disagree

As the debate over taxing the state’s richest residents and businesses rages on, the average “middle class” New Jersey resident continues to see their cost of living rise, a recent report found.

According to an annual study from SmartAsset, the Garden State ranks second in the nation for the highest income a household can earn and still be considered middle-class: $208,588. Meanwhile, it takes $69,529 to cross the lower threshold into middle class in New Jersey.

• Related: NJ Raises Minimum Wage To $15 – But It Still Isn’t Enough To Live On
• Related: NJ Sees Huge Spike In Number Of Workers Postponing Retirement, Study Finds

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