In late 2009, the lame duck legislature allowed New Jersey’s temporary income tax surcharge on the state’s wealthiest households to expire. Since then, the governor has vetoed numerous attempts by the legislature to make the Garden State’s income tax structure more equitable.

The result: the state forfeited between $4.2 billion and $7 billion in revenue between 2010 and 2016 – further enriching the state’s top earners while cutting property tax relief for middle-class homeowners, increasing public transit fares and raising tuitions at the state’s public colleges to unaffordable levels.

Other states have not made these mistakes.

In recent years, states like California, Minnesota, Maine and New York have enacted or extended substantial income tax increases on their wealthiest households, generating tens of billions of dollars between them to pay for schools, health care and more. 

And despite the doomsday cries that raising taxes at the top will cripple a state’s economic growth, the opposite has largely been true. States like California, Minnesota and New York have been faring quite well, having boomed out of the recession with faster job growth than the nation as a whole.

Meanwhile, states that have experimented with large-scale income tax reductions – like Kansas – have suffered the consequences, with nagging budget gaps and slow economic growth, and are beginning to reverse course.

New Jersey’s policymakers ought to look closely at California’s 2012 tax changes, which added new income tax brackets and raised rates progressively as incomes increased. Loosely emulating the Golden State’s model could raise well over $1 billion a year to invest in schools, property tax relief or other targeted investments, while only raising taxes for the wealthiest 5 percent of New Jersey families.

For further information about our proposed plan, please click here.