Like an addict who finally enters rehab, New Jersey Gov. Phil Murphy has promised to go cold turkey on tax increases. This is not a parody from the Babylon Bee. The most taxing Governor this side of Illinois declared Tuesday in a campaign debate that “I pledge to not raise taxes” in a second term.
This conversion on the road back to Trenton was such a shock that the debate moderator literally thought she’d misheard. “Yes, you will raise taxes?” replied ABC’s Sade Baderinwa after Mr. Murphy’s remark. He repeated the no-new-taxes pledge.
No addict will have a harder time at his 12-step sessions. He campaigned in 2017 on higher taxes. In 2018 he raised New Jersey’s top corporate-tax rate to 11.5%, the nation’s highest. Last year he raised the top rate on income to 10.75% from 8.97%, and extended the corporate surtax.
The Tax Foundation says New Jersey has the worst tax climate in the U.S., and homeowners pay an average of more than $9,000 a year in property taxes, according to the Department of Community Affairs.
Mr. Murphy used to think this was a virtue. Describing the state’s tax climate in 2019, he told voters “if that’s the only basis upon which you’re going to make a decision, we’re probably not your state.”
Why swear off tax increases now, beyond the obvious reason that he’s running for re-election in November? It’s not because the Governor has suddenly discovered fiscal chastity. The state will spend $45 billion this year, up from $37 billion when Mr. Murphy became Governor in 2018. His February budget for 2021 raised spending by $3 billion.
He can afford to be restrained on taxes now, at least for a while, because New Jersey is rolling in money. The state received $6 billion in Covid relief from the feds, not counting Covid payments to New Jersey residents and businesses. And like most states, New Jersey’s revenue has surged as the economy has recovered amid a rising stock market that has thrown off capital gains and produced a budget surplus.
Will the Governor keep his tax pledge? Perhaps if the good revenue times keep rolling. But he’s also built in new spending obligations that will rise over time, and the tax base is shrinking as more taxpayers flee. The 2020 National Migration Study ranked New Jersey the top state for net departures. Respondents ranked taxes and cost of living as their top concern.
Sooner or later the state’s public unions, the real rulers in Trenton, will demand more for pensions, higher salaries and more dues-paying employees. We’re betting on a relapse.
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