Although Senator Sweeney estimated that the bill could generate over $800 million of additional revenue, this falls far short of the $1.5 billion of tax increases that Governor Murphy had called for in his original budget proposal. Under Governor Murphy’s proposal, the bulk of the additional revenue would come from increasing the state sales tax rate and imposing a “millionaire’s tax” on wealthy individuals. Only $110 million of additional revenue would come from the corporate income tax through the adoption of “water’s edge” combined reporting and market sourcing for services. Senator Sweeney has been a vocal opponent of Murphy’s proposed tax increases on individuals and favors more significant tax increases on corporations to fund looming expenses related to education, transportation, and state pensions.
It’s unusual for there to be a budget impasse among members of the same party. Yet earlier this week, Governor Murphy stated that he would veto any proposed legislation that did not include his proposed plan to “modernize” New Jersey’s CBT. (Combined reporting and market sourcing are conspicuously absent from S2746.) If the budget isn't finalized by June 30, New Jersey will be facing a potential government shutdown.
A summary of Senator Sweeney’s proposed CBT amendments is provided below.