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On Tuesday, Governor Murphy delivered his third annual budget address where he outlined his vision for the next fiscal year. The governor’s $40.9 billion proposal includes big investments in education, from pre-K to college, transit infrastructure, tax credits for working families, and much more. The budget also takes steps to repair the New Jersey’s fiscal foundation with a record pension payment, $1.6 billion surplus, and $300 million deposit into the state’s Rainy Day Fund. These latter two investments are critical safeguards against a future economic downturn or superstorm. [NJSpotlight / John Reitmeyer]
Approximately 60,000 workers across the state would get a boost in their take home pay under Governor Murphy’s plan to expand the state’s Earned Income Tax Credit (EITC). In his budget address, the governor proposed both raising the tax credit benefit and lowering the age eligibility threshold for workers without children from 25 years of age to 21. The EITC has been proven effective at lifting low-paid workers and their families out of poverty, so this reform is sorely needed. There are additional bills in the Legislature, however, that would expand the tax credit beyond what the governor proposed. [NJBIZ / Daniel Munoz]
Another big proposal in the budget: two free years of college for students whose families earn less than $65,000 per year. The Garden State Guarantee would build upon the success of New Jersey’s free community college program by extending it to public four-year colleges and universities. This program is the first of its kind in the nation and would make college more accessible for tens of thousands of New Jersey students. It would also require colleges to freeze the student’s tuition rate for four years. [NJ.com / Kelly Heyboer and Brent Johnson]
For the third year in a row, Governor Murphy has proposed a millionaires tax to help fund new investments in the state budget. This would increase the marginal tax rate on earnings over $1 million from 8.97 percent to 10.75 — or less than two cents for every dollar over $1 million. Approximately 18,000 of New Jersey’s wealthiest residents would pay this new tax rate, as well as an additional 19,000 out-of-state residents who earn income in New Jersey. This analysis from The Record charts how much more New Jerseyans would pay given their income level. As NJPP President Brandon McKoy states in this article, “It’s a start” toward ensuring the wealthiest among us pay their fair share. [NorthJersey.com / Ashley Balcerzak]
As NJPP Research Director Nicole Rodriguez stated in our rapid reaction to the budget address, the millionaires tax is not the end all be all of tax fairness. More can and should be done to ensure the wealthiest individuals and biggest corporations pay their fair share in taxes. One way forward: extending the 2.5 percent corporate business tax (CBT) surcharge on high-earning businesses. Last Friday, Senate President Sweeney proposed doing just that in his plan to dedicate funding to NJ Transit. Extending the CBT surcharge is smart policy, especially in the wake of the 2017 Trump tax cuts that provided a huge windfall for big corporations. [NJBIZ / Daniel Munoz]
To learn more about true tax fairness and how the state budget can advance economic and racial equity, please join us and leading policy experts on April 24 at NJPP’s annual conference, Progress 2020: Policy for the People. Early bird registration is still open. Additional speakers and breakout sessions will be announced shortly, so keep an eye on your inbox over the next couple of weeks! [NJPP / Progress 2020]
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