“These tax increases, particularly the millionaires tax, will feel more costly to taxpayers because federal tax law no longer permits deductions for state and local income or sales taxes, and limits the deduction for property taxes to $10,000,” Moody’s analyst Larsen wrote in a March 22 note to clients. Her firm rates New Jersey’s credit A3, four steps above junk. Only Illinois has a lower state rating.

Lesser Evil
Sweeney has his own proposal to gain $657 million via a 3 percent surcharge on corporations earning more than $1 million annually. Murphy has said it wasn’t an alternative to his millionaire’s tax, for an estimated $765 million. That won’t happen without Sweeney’s posting it for a vote in the legislature’s upper house.

“He’s going to realize there’s no stomach on the Democrat side for raising these taxes,” Assembly Minority Leader Jon Bramnick, a Republican from Westfield, said of Murphy.

Sweeney didn’t respond to two telephone calls for comment. A statement issued by him and five colleagues immediately after Murphy’s budget speech said the governor’s “ambitious proposals” had appeal, “but will require thorough review and consideration to determine if they are achievable.”

Voter Backlash
Jon Corzine, like Murphy a Goldman veteran, was the most recent governor to pitch $1 billion-plus tax increases. His first budget, in 2006, boosted the sales tax to 7 percent from 6 percent and applied it to more consumer services, to raise $1.4 billion. Democratic lawmakers resisted, resulting in a week-long government shutdown, but ultimately they approved it with an agreement that put half the money toward property-tax relief.

In 2009, Corzine again pitched tax increases in excess of $1 billion. The legislature went along with a temporary higher tax on $400,000-plus incomes and higher levies for liquor, wine and cigarettes. He was ousted that November by Christie, who promised to return New Jersey to fiscal health.

Instead, missed revenue forecasts and an unfunded pension-and-benefits liability that reached $184.3 billion in 2017 led to a record 11 downgrades of New Jersey debt by the three major credit-rating companies during Christie’s tenure.

Murphy inherited the nation’s highest property taxes, the second-lowest credit rating behind Illinois and the least-funded pension system among U.S. states. New Jersey’s fiscal health ranked the worst in a 2017 study by the Mercatus Center at George Mason University in Arlington, Virginia.

Budget Abyss
A millionaire’s tax would cover less than one-tenth of an estimated $8.7 billion budget deficit heading to July 1, the start of the fiscal year. Still, Murphy has support from Senator Richard Codey, a Democrat from Roseland elected to the upper house in 1982.

“My district is the wealthiest in the state of New Jersey,” Codey, who represents the Essex County suburbs of New York city, said in an interview. “I haven’t had one phone call to my district office complaining about that idea.”