The Corner

Politics & Policy

New Jersey Democrats Abandon Tax Hike

New Jersey Governor Phil Murphy speaks after taking the oath of office in Trenton, New Jersey, January 16, 2018. (Lucas Jackson/Reuters)

Two core planks of the contemporary Democratic party are 1) a host of new, sprawling social programs and 2) a set of tax hikes on the rich to fund them. Just vote Republicans out of office, soak the rich, and use the proceeds to fund single-payer health care, free community college, and universal pre-kindergarten. Democrats are campaigning for offices local and national on that agenda. Can it be that easy? An article by Jeff Stein for the Washington Post suggests the answer is no.

“Democrats in the New Jersey state legislature approved a tax hike on millionaires five separate times under then-governor Chris Christie (R.) — knowing he would veto it,” Stein writes. “But now that the state has a liberal governor eager to sign the bill, Democratic legislators are backing off the ‘millionaire’s tax.’” In the words of Democratic state senator Steve Sweeney, who had been instrumental in shepherding through the tax while Christie was in office, New Jersey’s millionaires are simply “taxed out.”

Maybe they are. Millionaires in New Jersey might not feel rich: Their state, local, and property taxes are high compared with the rest of the country, as is their cost of living. Many have seen their federal taxes rise after the Tax Cuts and Jobs Act capped the state-and-local tax deduction at $10,000. They might even define themselves as “upper-middle class.” But if Democratic politicians want to implement the social programs they campaign on, they’ll have to raise taxes on high-income earners — including millionaires in New Jersey.

There is a fairly obvious tension here for the Democratic party: It relies on the support of upper-middle class Americans, yet implementing its social agenda would require those Americans, not just billionaire bogeymen, to pay more in taxes. As Megan McArdle writes, “Democrats are going to have to either give up their big dreams or hand those voters the bill, because they’re the ones with most of the money.”

It’s easy to pass a “millionaire’s tax” when you know the governor will veto it. It’s easy to insist that a national jobs-guarantee program will be fully funded by raising taxes on the 1 percent. But an ambitious social agenda — whether at the state or federal level — requires an ambitious tax-hike regime to fund it. Across the country, Democrats are campaigning on the former. But they don’t yet have to deal with the reality of the latter. As the case of New Jersey demonstrates, confronting the reality of raising taxes on your constituents is harder than it sounds. If the party is serious about its Scandinavian-style social programs, it’ll have to get serious about tax hikes.

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