New Jersey Cannot Afford More Delays on Fair Revenue

By Eric Benson, For the Many NJ Coalition Manager

(Photo credit: For the Many)

New Jersey is at a crossroads.

As federal cuts continue and more are expected, state leaders face a choice: continue the cycle of chronic underinvestment and budget shortfalls, or finally build a tax system that meets the needs of the people who live here.

For years, New Jersey families have been told we simply cannot afford stronger investments in housing, child care, schools, transit, health care, or affordability programs. But somehow, there always seems to be money available for corporate subsidies, tax breaks for wealthy developers, and giveaways to major industries.

That contradiction is not accidental. Over time, wealth has concentrated at the top because wealthiest households and largest corporations have benefited from tax structures and economic policies designed in their favor, while working- and middle-class families are left with rising costs and shrinking public investment.

Meanwhile, year after year, New Jersey passes budgets that barely keep pace with inflation and growing need. Even now, state leaders are debating a budget built around a structural deficit of roughly $1.5 billion as though that represents fiscal stability. It does not. A budget that struggles to maintain existing services while costs keep rising is not sustainable. It is stagnation, and communities across New Jersey are already feeling the consequences.

Across sectors, residents are feeling the effects of long-term underinvestment. Families face impossible housing costs. Child care remains unaffordable for too many parents. Schools and local services are stretched thin. Utility and energy costs keep climbing. Health care expenses strain household budgets. At the same time, many of the largest corporations in these industries report record profits.

Affordability will not improve on its own. It requires public investment, and public investment requires revenue.

That is why the proposals recently introduced by Assemblymember Katie Brennan and state Senator Raj Mukherji are so important.

The first proposal (A5121) would modernize New Jersey’s existing millionaire’s tax by creating additional tax brackets for income above $2 million, $5 million, and $10 million. Fewer than one percent of households would be affected, yet the proposal would raise an estimated $1.2 billion a year for education, infrastructure, and services that keep New Jersey affordable.

The second proposal (S4204 / A5039) would address a long-standing corporate tax loophole that allows some multinational corporations to shift profits overseas and avoid paying what they owe in New Jersey. Requiring worldwide combined reporting would make these corporations report offshore profits when calculating their state tax obligations, generating an estimated $800 million a year without raising overall tax rates for most businesses.

These are not radical ideas. They are practical responses to a changing economy.

Right now, large multinational corporations benefit from New Jersey’s infrastructure, workforce, public schools, transportation systems, and consumer market while using accounting maneuvers to hide profits offshore. At the same time, ultra-wealthy households continue accumulating more wealth while ordinary families absorb rising costs in nearly every part of daily life.

A fair tax code should reflect those realities.

Opponents often warn that asking the wealthiest residents and biggest corporations to contribute more will somehow drive them away. But New Jersey already has a millionaire’s tax, and the number of high-income households in the state has continued to grow. The data simply does not support the claim that wealthy residents are fleeing because they are being asked to pay slightly more.

The same is true for corporate accountability measures. Multinational corporations are not going to walk away from millions of New Jersey consumers simply because the state asks them to stop hiding profits offshore. These companies don’t have to be “based here” to be taxed here. They are taxed on the profits they earn doing business here, and New Jersey remains one of the largest and wealthiest consumer markets in the country.

Most importantly, delay comes with consequences. Even when new revenues are enacted, it takes time for investments to reach communities and improve people’s daily lives. The longer New Jersey waits to act, the further low- and middle-income households fall behind, and the harder it becomes to reverse years of underinvestment.

New Jersey does not have a shortage of wealth. It has a shortage of political urgency about where that wealth is concentrated and whether the current state tax code reflects economic reality.

New Jersey and its residents are already underwater. Without bold action to raise fair, sustainable revenue, the state will continue shifting the costs of economic inequality onto residents while the wealthiest households and largest corporations pull further ahead.

The time for bold, fair, progressive revenue is now. The question in front of New Jersey is not whether we can afford to act. It is whether we can afford to keep waiting. To get involved in the coalition, please sign up for the For the Many email action alerts.

Eric Benson is the Coalition Manager of For the Many NJ, a statewide coalition of more than 40 organizations committed to fixing New Jersey’s upside-down tax code and ensuring the state budget works for everyone — not just the wealthy few. Our members include labor unions, grassroots community groups, immigrant justice advocates, environmental leaders, anti-poverty organizations, and policy experts from across the state.