(Bloomberg) -- New Jersey Senate President Stephen Sweeney is looking to impose a 3 percent tax surcharge on businesses with more than $1 million in net income.
The bill would recapture a share of the federal corporate tax cut “that is being financed on the backs of taxpayers in New Jersey and other high-tax states,” Sweeney, a Democrat from West Deptford, said Tuesday in a statement. The federal law cut the corporate rate to 21 percent from 35 percent.
About 2,375 companies in New Jersey earn more than $1 million, and are expected to pay about $1.97 billion of a projected $2.4 billion in corporate business taxes this year, according to the lawmaker. The surcharge would generate $657 million, he estimated.
Sweeney's proposal comes a week before Democratic Governor Phil Murphy proposes his first state budget. Murphy has said he intends to propose a tax on millionaire residents to boost New Jersey's collections. Sweeney has expressed concerns about increasing taxes on individuals who, thanks to President Donald Trump's tax overhaul, are limited in how much of their state and local taxes they can deduct from their federal returns.
“People in New Jersey got hurt by the quote-unquote tax cut,” Sweeney said of last year's change in the federal tax code. Corporations, he said, “got major windfalls.”
Sweeney told reporters that his tax surcharge, with other budget changes, would provide a total of $758 million more for education. That would be the largest funding increase in more than 25 years, he said.
“There's smart taxes and there's not smart taxes,” Sweeney said when asked how his plan would square with Murphy's millionaire's tax proposal. “What's a good tax to raise and what isn't?"
Murphy, at a news conference earlier on storm preparations, said he wasn't familiar with details of Sweeney's plan.
To contact the reporter on this story: Elise Young in Trenton at eyoung30@bloomberg.net.
To contact the editors responsible for this story: Michael Shepard at mshepard7@bloomberg.net, Flynn McRoberts at fmcroberts1@bloomberg.net, Stacie Sherman
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