Gov. Phil Murphy is accumulating quite the progressive record in NJ and can now point to a millionaires tax as another notch in his lapel, alongside able coronavirus management and a $1k baby bonds initiative.
Gov. Philip D. Murphy, a Democrat, announced a deal with legislative leaders to increase state taxes on income over $1 million by nearly 2 percentage points, giving New Jersey one of the highest state tax rates on wealthy people in the country. The agreement also includes an annual rebate of as much as $500 for families making less than $150,000.
“We do not hold any grudge at all against those who have been successful in life,” said Mr. Murphy, a former executive at the investment bank Goldman Sachs. “But in this unprecedented time, when so many middle-class families and others have sacrificed so much, now is the time to ensure that the wealthiest among us are also called to sacrifice.”
Natick native Phil Murphy is doing his home state proud. Unfortunately Charlie Baker and other lawmakers are waiting for the federal cavalry to arrive, and if there’s anything we know about our government under Donald Trump it’s that the cavalry ain’t coming.
The Herald is estimating a $4.4 billion shortfall compounded by a 14% decrease in revenue from this time last year. Not to mention double digit unemployment. In this environment cuts will be born by city and towns which will have to lay-off employees. I was devastated to find out many of our lunch ladies were furloughed and have lost out on their benefits. Not only will my district lose the parity funding we fought hard for in the SOA, but we could even see cuts. Many other places will as well.
A modest millionaires tax could generate nearly $3 billion to offset these cuts and it could be rolled back as economic conditions improved. Already the top 10 billionaires in the commonwealth have gotten richer while the rest of us are crying out for help. This state made them wealthy and is the nice place to live they call home because of a legacy of public investments in education and infrastructure. It’s time to build on that legacy and fund our future.
I hate this sort of mealy mouth explanation.
Our economy is rigged. It was rigged by those who are now receiving a grossly unfair proportion of the wealth that we, as a society, have created.
Their only “success” has been their political ability rig the system, convince us that it is a fair and impartial system, and that those of us who are unsuccessful are only deserving of charity that stems from the scarifies of the successful.
The much-vaunted millionaire tax in New Jersey is an example of standing at the shore and spitting into the wind. It is a 2% increase in the top marginal income tax rate. That means $20,000 in new revenue from an INCOME of $1,000,000. If this were applied in MA, it would take TWO HUNDRED TWENTY THOUSAND millionaires to erase the reported $4.4 B shortfall. While actual data is hard to find (surprise surprise), the MA DOR reports (https://www.mass.gov/doc/dor-2016-2017-taxes-on-adjusted-gross-incomes-over-1-million-by-municipality/download) that 20,414 filers reported gross income over $1M in 2017. The average adjusted gross income (AGI) for that group was $3.78M. The average tax paid per filer was reported at $179,000. A 2% increase in that income tax rate (from 4.7% to 6.7%) would generate $75,600 per filer. It would take over 58,000 average filers — about twice the number that actually exist — to cover the $4.4B shortfall.
Conversely, a WEALTH tax modeled after the proposal from Elizabeth Warren, would generate much more tax revenue. It is no accident that data about the wealth distribution in MA is essentially impossible to gather. Various sources (https://americansfortaxfairness.org/wp-content/uploads/MASSACHUSETTS-ATF-IPS-Billionaires-Report-FINAL-6-30-20.pdf) report that there are 18 billionaires in Massachusetts with a combined net worth of $70.5B.
Just as one scenario, suppose the state imposed a 3% wealth tax (matching Ms. Warren’s proposed federal wealth tax of 3% on billionaires). Wealth is a scale-free distribution, so the fact that there are 19 billionaires in MA means that there are about 200 people with a net worth between 100M and 1B, and about 2000 people with a net worth of between 10M and 100M.
The 19 people in the above list would pay a total of $2.1B under this 3% wealth tax — about half of the shortfall. Using an average of $150M and $15M for the other two groups, the total new revenue generated from a 3% wealth tax is about $3.92B. That would be collected from our wealthiest 2,500 filers — leaving most of the 20,000 high income families untouched.
We should STOP talking about income taxes and START talking about wealth taxes.
Sure the rates can be changed to whatever makes sense for the moment. My initial point wasn’t “let’s copy New Jersey exactly” but “look at what a progressive governor and legislature can do when they aren’t afraid of raising taxes on the wealthy?”.
FWIW the Fair Share Amendment would be a 4% tax on the first million and a sliding scale increased on the second million and so forth. It would generate at least $2 billion. I’m sure it could be adjusted for the present emergency and brought down. I’m also all for raising corporate taxes and taxing wealth.
https://www.raiseupma.org/fair-share-amendment-2022/
Understood.
As always, the rub here is the misplaced focus on income rather than wealth.
The most important economic disparity is NOT income concentration, it is WEALTH concentration. That’s why Elizabeth Warren put forward a wealth tax.
Federal, state and local governments should tax wealth each year just like they already tax the value of real estate. That is the obvious and straightforward path out of this hostile wasteland.
Can you please offer some data to support this?
There were 20,414 high-income filers in MA in 2017, three short years ago, and they collectively paid about $3.6B (20,414 filers times an average of $179,000 per filer).
Lets assume there are 21,000 today. When you talk of generating “nearly $3 billion”, I think you’re talking about nearly doubling the amount they collectively pay in taxes. I don’t see how such a tax can be accurately described as “modest”.