In a move that has sparked controversy, New Jersey Governor Phil Murphy has proposed a substantial tax increase on the state's largest corporations as part of his fiscal year 2025 budget. This proposal aims to generate dedicated funding for the long-struggling New Jersey Transit system.
The proposed corporate transit fee would see corporations with a net taxable income greater than ten million dollars paying an additional 2.5% in taxes. This new tax stands as the most significant increase in Murphy's $55 billion budget plan.
The tax hike proposal comes as somewhat of a surprise, as Murphy had previously pledged not to raise taxes during his reelection campaign. However, the financial difficulties faced by the state seem to have necessitated this change in approach.
The proposed budget also calls for a full pension payment of seven billion dollars, property tax relief amounting to three and a half billion dollars, and over eleven billion dollars in public education funding.
The Governor's office has stated that small and medium-sized businesses will not be affected by the new fee. Yet, this proposal has already attracted criticism from some quarters who argue that it could deter large corporations from operating in the state, potentially leading to job losses.
Nevertheless, Murphy's administration believes that this new tax will raise more than $800 million annually, which will help address NJ Transit's projected $1 billion shortfall next year. The Governor sees this step as crucial in securing the future of the state's public transportation system.
The proposal is now subject to legislative approval. If passed, it would mark a significant policy shift in how the state funds its public transit system, moving from a reliance on fares and general fund contributions to a model where the state's largest corporations would bear a significant share of the cost.