Published: Wed, March 14, 2018
People | By Neil Grant

New Jersey Governor Doubles Down on Marijuana Legalization

New Jersey Governor Doubles Down on Marijuana Legalization

The Democratic governor also would revert the state sales tax to 7%; it was cut to 6.625% under Republican predecessor Chris Christie.

Gov. Phil Murphy on Tuesday proposed raising and expanding the state sales tax, hiking income taxes on the wealthy and legalizing recreational marijuana under a budget plan he said represents a sharp break from the way the state was run the past eight years under a Republican administration.

"For many of our taxpayers, this was not a significantly noticeable amount, but it made a major hit to our general fund revenues and prohibited us from being able to make serious investments in New Jersey's future", said acting Treasurer Elizabeth Maher Muoio.

Murphy's budget would raise taxes by almost $1.6 billion in one of the country's highest-taxed states, while also increasing spending on education and transit.

"Any tax increases proposed in the budget must be considered in the context of the new federal tax law provisions limiting deductibility of state taxes on federal returns", said Janney Capital Markets municipal analyst Alan Schankel.

Murphy also proposes to tax Airbnb-style short-term rentals and ridesharing operations such as Uber and Lyft.

Following through on a campaign promise, he proposed raising the tax on incomes over $1 million from the top bracket of 8.97 percent to 10.75 percent.

Municipal Market Analytics analyst Lisa Washburn said Murphy is facing political resistance to the millionaire's tax. "I pledged to create a stronger and fairer New Jersey that measured success not by what we could do for the few, but by what we could accomplish for all nine million of our residents", Murphy said. "If these are our goals - as they must be - then the only sensible option is the careful legalization, regulation, and taxation of marijuana sales to adults", stated Murphy during his budget address.

But if that happens, it'll get taxed: a 25 percent excise tax, plus the sales tax.

That agreement led to higher gas taxes for transportation funding, but also lowered the sales tax.

The hike in the millionaires' tax would generate about $750 million.

Murphy's plan also calls for closing what he calls a corporate tax loophole, generating about $100 million.

It's not a new tax as much as stricter enforcement of a tax on the books. The pension funding, which is up 14% from the current 2018 budget, would still put New Jersey only at a 60% actuarially funded level and on pace to be fully funded in 2023.

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