The Ironworker Democrat Blocking a Millionaire Tax Hike
WHY YOU SHOULD CARE
Because his fight is a microcosm of the national Democratic debate over taxation.
By Nick Fouriezos
Steve Sweeney is an intimidating force. Physically, sure — his suspender straps strain over the frame of the ironworker who played offensive tackle as a teenager, when he could bench-press 450 pounds and “looked like a refrigerator,” as he puts it. But that’s lazy evidence of power. His true strength comes from his steely grip on New Jersey politics. The Democrat will likely become the longest-serving Senate president in state history in February, with more than a decade in office. This is a brash talker, who once called Chris Christie a “bastard” and a “rotten prick” — to the press, no less.
Actually, it was a “fucking bastard” and a “fucking rotten prick,” Sweeney informs me, but the Newark Star-Ledger columnist censored him for print. “I wouldn’t take one word back. I was so mad,” he says. In his view, New Jersey’s then governor, a Republican, decreased funding for children with disabilities to punish the Senate for writing its own budget that year. It was particularly offensive to Sweeney, who, despite talking like a mob boss with frequent curses and overtures on loyalty, gets soft when talking about his daughter with Down syndrome. “The government has a role, and it’s taking care of the vulnerable. And when the government doesn’t do that, that’s when I get really pissed off.”
The point: This 60-year-old isn’t afraid of anybody. This is why it was strange when the onetime backer of a millionaires tax — who declared the day after being reelected in 2017 that it would be the first bill he’d pass — reversed course once it became possible, as Democratic Gov. Phil Murphy took office in 2018.
You would think the progressives would be praising me for a corporate business tax. Crickets.
The decision pits Sweeney against the progressive zeitgeist shaping the party nationally, amid a presidential race where candidates are racing to soak the rich with higher taxes on high earners or a new tax on wealth.
“He is an anomaly. Where he comes from is Narnia, a world unto itself,” says Patrick Murray, director of the Monmouth University Polling Institute, who calls Sweeney a “throwback” to the type of socially liberal, fiscally conservative Democrat now being driven to extinction. It’s an apt description for Sweeney, who lords over a steady Democrat-Republican alliance in the Senate and admires dealmaking politicians like Democratic Gov. Andrew Cuomo of New York.
Whom to tax, and how much, is no longer a math equation — it’s become an ethical question for many voters. Increase taxes and, to conservatives, you are stealing from citizens’ pockets. Tax too low and, to liberals, you don’t care enough about the poor and rectifying inequality. The Sweeneys of the world would rather grapple with policy details than platitudes.
“I’m a weeds guy,” Sweeney says, explaining and exonerating himself on his millionaires tax reversal. What changed? The federal Tax Cuts and Jobs Act, passed by a Republican president and Congress in December 2017, which hurt wealthy New Jerseyans by limiting state and local tax deductions. Donald Trump had beaten him to the punch: Continuing with a millionaires tax would hit high earners with a double whammy. “If you drive a road every day, and then you see a sign that says the bridge is out, do you still drive on that road?” Sweeney asks rhetorically.
Sweeney sent Murphy another option: a 3 percent tax on corporations for four years, which the Senate president preferred because businesses saw their tax burden slashed from 35 percent to 21 percent in the federal tax reform. “They got a gift from Donald Trump, and they didn’t sell one more TV or one more loaf of bread,” Sweeney argues. “You would think the progressives would be praising me for a corporate business tax. Crickets.”
The frosty response comes partly because Sweeney wants to decrease spending on benefits for teachers and civil service workers. It’s a cause he has championed since entering the Senate in 2002, warning that pensions would bankrupt the state and drop its bond rating — meaning it could struggle to borrow money to fund schools or fix roads. That struggle has made for strange optics: a union leader — Sweeney still serves as vice president of the Ironworkers International of North America — despised by unions.
The New Jersey Education Association, the state’s biggest teachers union, said they “refuse to be scapegoated” in a statement in August of last year: “The very same Senate president who orchestrated the last raid on our member’s [sic] paychecks is coming back for more, using the same scare tactics and making the same empty promises.”
The NJEA was so desperate to get rid of Sweeney that it spent more than $5 million in 2017 supporting Fran Grenier, a pro-Trump Republican. Sweeney, who called it a waste of time and money after winning by 18 percentage points, was particularly frustrated at Murphy. “He asked Murphy to intercede, call off the dogs. And Murphy didn’t do it,” Murray says. What resulted was the most expensive legislative race in state history, at $20 million.
Murphy’s camp is trying to play down tensions. The governor did campaign with Sweeney multiple times during his reelection. Spokeswoman Alyana Alfaro declines to comment on the charge that Murphy didn’t intercede with the teachers union, but says the governor’s work to expand paid family leave and ensure equal pay and a higher minimum wage was all “enacted in partnership with the Senate president.”
Still, bad blood remains. Sweeney notes that his corporate tax hike would have raised more money ($1.12 billion) than the millionaires tax ($765 million), although it also came with baggage. “Murphy wasn’t concerned with having the highest income tax on the East Coast, but it bothered him we would have the highest corporate income tax on the East Coast,” Sweeney says. Alfaro instead contends that “this is about tax fairness — asking the highest earners in our state to shoulder their fair share.”
Last year, New Jersey’s leaders settled on a compromise corporate tax hike (2.5 percent for two years, then 1.5 percent for the next two) and a tax on those earning more than $5 million, rather than a true millionaires tax.
But the debate isn’t going away, with the state’s finances perennially under strain. And neither is the stubborn ironworker in the middle.