What will Murphy’s tax hikes cost you?

What will Murphy's tax hikes cost you?

24 Nisan 2018 - 02:00

Gov. Phil Murphy got an earful from some taxpayers at a town hall Thursday night, the third road show for his $37.4 billion budget.

"This state is too expensive, and you're making it worse," said Greg from Freehold, who was likely speaking for many.

He was talking about the more than $1.5 billion in new taxes the Democratic governor is proposing in his first budget, including an increased and expanded sales tax and higher taxes on millionaires. He also wants to close loopholes that would extract additional revenue from multi-state businesses and hedge fund managers.

Of course, $1.5 billion is a big number. But how much would the tax increases really cost you?

We tried to figure it out. 

That sales tax hike is the one to hit the greatest number of New Jerseyans. Just how hard depends what and how much you buy. Others hit you if you're rich, will be smoking legal weed or use some services like Uber. 

None of this has happened yet because Murphy first needs the OK from reluctant fellow Democrats in the Legislature.

So using some admittedly inexact estimates, let's see how much Murphy's budget could cost you.


Sales tax

Most people don't pay much attention to the sales tax until they're making a big purchase, like a car. So don't be shocked if you didn't notice that starting Jan. 1, it was cut from 6.875 percent to 6.625 percent. That was after a drop the year before from 7 percent to 6.875 percent.

Murphy wants to reverse those cuts, bringing the tax rate back to 7 cents on the dollar.

During the debate over that tax cut, which was part of a deal to raise taxes on gas, New Jersey Policy Perspective provided some estimates on how much households would save, based on their income.

Here, we'll take those in reverse to reflect the increased cost to you each year:

* For a household income of less than $25,000, you could expect to pay another $32 a year.

* Between $25,000 and $49,000,  $61 more a year.

* Between $49,000 and $79,000, $86 more a year. 

*  Between $79,000 and $132,000 a year, $116 more a year.

* Between $132,000 and $286,000, $152 more a year.

* Between $286,000 and $808,000,  $255 more a year.

* And for the top 1 percent of households, those with income above $808,000,  $723 more a year.

"Pile
Samantha Marcus | NJ Advance Media for NJ.com
Millionaires tax

Murphy's proposed new marginal gross income tax rate would kick in for the first dollar people make over $1 million.

The vast majority of New Jerseyans won't pay this increased tax. But, according to the Department of Treasury, about 20,000 residents and 19,000 nonresidents will.

Murphy wants to raise the tax rate on this income from 8.97 percent to 10.75 percent. This nearly 2 percentage point increase is expected to drum up about $765 million in new revenue.

How much will it cost some of the richer among you? 

Let's say your household income was $2 million last year. Forget 401(k) contributions and deductions. At the current marginal tax rate of 8.97 percent on income over $500,000, you would have paid around $162,000 in state income taxes.

With a top marginal tax rate of 10.75 percent on income over $1 million, you would now pay $180,000 for $2 million in household income. 

Democratic lawmakers aren't crazy about the tax so far, but if they do eventually sign on, don't think you'd get a break because the year is already in progress. It would be retroactive to Jan. 1. 

"Marijuana
Marcio Jose Sanchez
Marijuana tax

Marijuana isn't legal in New Jersey, so as of now, any consumption is, well ...  tax free. But if Murphy gets his way, it will not only become legalized — but taxable.

He would tack on a 25 percent excise tax and it would be subject to the proposed 7 percent sales tax, for a total of 32 cents on the dollar.

A joint report from the American Civil Liberties Union and New Jersey Policy Perspective estimated New Jerseyans consume 2.5 million ounces of pot each year and pay an average of $343 per ounce. Legal weed may bring the price tag down, but we'll assume for the minute that it's the same. 

Many New Jerseyans are casual users, consuming about 1.2 grams per month, according to the report. That's about half an ounce a year, setting you back $174 untaxed. But the new excise and sales taxes would add $55.75 to your tab.

But say you are one of the 77,571 or so people who consume 44.8 grams per month. These new taxes are going to cost you. You're consuming about 19 ounces a year, with an estimated price tag of $6,504. Murphy's marijuana taxes will jack up your annual spending by $2,081.

(NJPP's consumption data is based on the U.S. Department of Health and Human Services' National Survey on Drug Use and Health.)


Kaynak:Nj.com

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