Press of Atlantic City: Income tax hike a missed chance for NJ fiscal responsibility

The Legislature has finally given Gov. Phil Murphy the so-called millionaire’s tax he’s sought his whole time in office.

Twice before, legislative leaders have rejected the increase because it might increase the already substantial flight of millionaires from New Jersey to lower taxing states — which is just about all of the others.

For incomes over a million a year, the tax rate will increase from 8.97% to 10.75%. That gives New Jersey the third-highest top tax rate in the country, behind California and Hawaii.

The political parties have hit income taxes on the wealthy tax back and forth like a tennis ball over the years, using it to raise funds and garner support. The Democrats increase the top tax rate, the Republicans hold it steady or even drop it a bit, and then the Democrats boost it some more.

There are good arguments for and against a high top tax rate, which makes it useful politically. Increasing taxes on the highest earners is fair in an era with increasing income inequality. Depending on high income taxes often fails states exactly when they need the revenue, when stocks and the economy sink.

As we’ve said before, “returning to a millionaires’ tax seems natural for a Democratic administration.” But now it’s being done at a bad time and in a harmful way.

Read the full editorial here.