Millionaires … businesses … how about summer renters at the Shore?
In the ongoing battle among Democratic leaders to determine just who (and how much) they will tax in order to meet the needs of their budget dreams, Senate President Steve Sweeney on Wednesday announced a new combination of revenue sources that includes a seasonal renters tax at the Jersey Shore.
Sweeney (D-West Deptford), in an effort to find common ground with Gov. Phil Murphy, not only has doubled down on the corporate business tax, as well as a repatriation tax, he has offered to implement, among other taxes, a seasonal rental tax that would collect $250 million, monies that would be mainly derived from Jersey Shore properties.
He said at a news conference Wednesday afternoon that New Jersey is the only state that has not implemented the tax along the East Coast.
“We’re the outlier,” he said.
The tax, at 6.625 percent — the sales tax rate — would cover any rentals of less than 90 days and could bring in $250 million in revenue for the state.
On Wednesday night, during a telephone town hall, Murphy said he was opposed to the idea.
“When you can easily tax millionaires and, instead, someone wants to tax the Jersey Shore, I don’t get it,” he said. “That, to me, is a no-brainer.”
The rental tax is just one way Sweeney said the state can raise revenue.
In addition, Sweeney anticipates collecting $200 million from the repatriation tax, though the Office of Legislative Services has said that is likely to be closer to $400 million, and $110 million from a 1 percent increase in the realty transfer fee for properties valued at more than $1 million.
In his latest proposal, the CBT would expire after four years, rather than an original two, and the Legislature has decreased its revenue expectation after Murphy pushed back on its numbers. Sweeney said it now anticipates $650 million, down from an original $805 million.
Sweeney said these changes were “surgical in nature” and meet Murphy’s ask of recurring revenues.
“Honestly, all these taxes really, really bother the hell out of me, because what we’re not talking about is fixing New Jersey,” Sweeney said. “If we can get an agreement on the revenues, we’re fine.”
Getting an agreement is proving to be difficult.
Sweeney is trying to find a compromise between the governor’s millionaire’s tax hike (which Sweeney disagrees with) and the corporate business tax hike (which Murphy disagrees with).
When asked about the corporate business tax and Murphy’s aversion to it because it would impose the highest tax in the country, at 13 percent, on companies with more than $25 million in allocated revenues, Sweeney said he didn’t love it, either.
“I’m as concerned, if not more; that’s why it expires, it sunsets,” he said.
Sweeney admitted having voted five times in favor of the millionaire’s tax in the past, as well as tweeting out support of it. But he said the federal tax reform by President Donald Trump has changed all that.
“Millionaires, when they leave, they take their businesses with them,” he said, adding that corporations won’t do the same.
In addition, the corporations, unlike New Jersey’s top earners, didn’t get hit by Trump’s tax reform. Instead, they saw a significant windfall — in the billions of dollars — which they should share with New Jersey, he said.
Sweeney also said he could not accept increasing the sales tax, referencing bordering state Pennsylvania, which just passed its budget without raising its sales tax.
The Legislature has backed down from its inclusion of audits as sources of savings, and instead not provided estimates, but kept them in the budget.
But at the end of the day, the new announcement is leaning on the same idea: tax the rich even more, in a state where the rich are already taxed.
Michele Siekerka, CEO and president of the New Jersey Business and Industry Association, said the shore rental tax is a bad idea for two reasons. First, it taxes one of the biggest economic drivers of the New Jersey economy, tourism, and secondly, the shore has only just recovered from the devastation of Hurricane Sandy—which emptied the shore for at least four years after.
Sweeney said he and his colleagues looked for other sources of revenue based on Murphy affirming he was open to hearing other ideas at their last meeting.
Despite this sudden unearthing of new revenue options, Sweeney said he is confident the state will not shut down, but, if it does, he places the blame squarely on Murphy’s shoulders for not “fixing New Jersey.”
“We have got to get a commitment from this governor,” he said.
The new total revenue from the changes offered by Sweeney is $899 million.
Sweeney said that, if the governor approves, the Legislature could have bills drafted and passed by Friday.