Union County Students Use Proms To Push For NJ Millionaire’s Tax

UNION COUNTY, NJ — Dozens of Union County students have been using their senior proms as an opportunity to join the #SchoolsNotMillionaires movement.

Over the past weeks, students at eight high schools in Elizabeth and Union have been wearing their support of a “millionaire’s tax” in New Jersey on their sleeves, proudly displaying handmade, money-green paper flowers at their proms in lieu of traditional corsages and boutonnieres.

“It’s very difficult to raise taxes on the rich because they’re well-connected and vocal,” said Axel Rodriguez, a Union County high school senior and youth leader at Make the Road New Jersey.

“We are calling on our legislators to do the right thing and put tax fairness in our budget,” Rodriguez explained. “That’s why I’m wearing a #schoolsnotmillionaires corsage this prom season.”

Gov. Phil Murphy has proposed a hike in the 2020 state budget that would raise income taxes for households making $1 million or more. His proposal would increase the rate for millionaires from 8.97 percent to 10.75 percent, and would reportedly raise $447 million in new revenue for the state, some experts say.

• See related article: NJ Progressives Give 5 Reasons Why Millionaire Tax Is 'No-Brainer'
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In Union County, just 0.02% of the population are millionaires. Meanwhile, students and their families continue to struggle to make ends meet and pay for college, youth organizers with Make the Road New Jersey said.

“New Jersey has arguably more rich people than any other state — and the number of high earners is growing,” said Lisbeth Argueta, a high school senior.

“It’s safe to say that the rich have benefited most from our growing economy, yet they continue to pay a lower share of their income in local and state taxes than anyone else,” Argueta opined. “That doesn’t sound right to me.”

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A MILLIONAIRE’S TAX IN NEW JERSEY?

The idea of establishing a millionaire’s tax in New Jersey – a centerpiece of Murphy's campaign platform – was only partially enacted in fiscal year 2019 in an effort to avoid a budget shutdown. Last year, state lawmakers settled on a higher income tax rate for earnings over $5 million.

According to a recent poll, seven out of 10 New Jersey residents are in favor of the idea of hiking the tax for millionaire households. However, Murphy's proposal has hit a wall with lawmakers – including those from his own Democratic Party – who have voiced strong opposition to his plan.

Recently, the state's top lawmaker, Democratic Senate President Steve Sweeney, scuttled the tax hike proposal, issuing a statement that said New Jersey "needs a real budget with long-term, sustainable property tax savings, not gimmicks."

Murphy offered $250 million in property tax relief to residents if lawmakers approve his plan to raise taxes on those making $1 million or more a year. The governor's proposal would deliver $250 million in additional tax relief in the form of a one-time, $125 refundable tax credit on 2019 Gross Income Tax (GIT) returns.

But Sweeney has dismissed that idea, too.

"For this governor, the millionaire's tax is just a talking point," Sweeney said last month. "First, he said he needed it to balance the budget. He didn't. Now he says he wants it because he has suddenly discovered that property taxes are an issue after years of saying that high property taxes are not a problem because New Jerseyans get value for their taxes."

• See related article: Gov. Murphy Signs 7 Bills Into Law; Tax Hike Plans In Peril

The idea of raising taxes for millionaires in the Garden State isn't without its opponents, however.

After Murphy announced his latest millionaire's tax proposal, the Roseland-based New Jersey Society of Certified Public Accountants (NJCPA) threw water on the idea, stating that its members often hear objections about the state's high taxes from clients who are looking to leave New Jersey.

• See related article: Accountants Critique NJ Budget, Millionaire Tax

In a survey of its members, the group found that 75 percent have recommended to at least one client to move out of state due to New Jersey's income taxes.

According to the NJCPA:

"The expansion of the millionaires' tax proposed by the governor directly impacts small businesses that flow their income taxes through personal returns. We already have some of the highest personal income and business taxes in the nation, and our rates compare unfavorably with neighboring states. The proposed marginal tax rate of 10.75 percent on income above $1 million would put New Jersey well above New York State's rate (8.82 percent) and would be more than three times Pennsylvania's flat rate (3.07 percent)."

In March, Moody's investor services issued an analysis that said states that rely on taxes on high income earners – such as New Jersey – experience greater revenue volatility when a recession hits.

"The Murphy administration and the Legislature already raised taxes $1.6 billion last year to pay for increased state spending, and here we are a year later facing yet another tax increase," said Andrew Musick, NJBIA vice president for government affairs.

A millionaire's tax will make New Jersey's revenues "much more volatile" and vulnerable to an economic downturn, but will do nothing to solve the long-term financial problems the state faces, Musick charged.

"We need to start now to reduce long-term pension and health benefit costs," Musick said. "If we don't, they will just continue to eat up more and more of the state budget, and no amount of tax increases will ever solve the problem."

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