(Bloomberg) -- New Jersey should increase taxes on wealthy residents and big corporations to balance its budget, a group of state college economics professors wrote in a joint letter to Governor Phil Murphy and legislative leaders.
Spending cuts would be counterproductive, and would have a more negative impact on residents than raising taxes, the group wrote. A tax-rate increase on those earning $250,000 or more would raise about $1.5 billion in new revenue each year, while extending a corporate tax surcharge of 2.5% to businesses with profits of $1 million or more would provide another $425 million, according to the group of more than 90, mostly professors from Rutgers University and other colleges in the state.
“Large cuts would erode the health and social infrastructure needed to continue combating COVID-19, increase inequality, and exacerbate the economic downturn,” they wrote in the letter.
Murphy, a first-term Democrat, must present a fiscal 2021 budget to lawmakers by Aug. 25. He has estimated a $10.1 billion shortfall through June 2021. On Aug. 12, he won a state Supreme Court ruling allowing the state to sell as much as $9.9 billion in debt to help plug the revenue hole.
Murphy said the ruling would help him keep schools and other programs funded, but the state still needed federal government assistance. Stimulus talks have been at an impasse in Washington over the amount of aid that should go to states and cities devastated by Covid-19.
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