Deal Reached in N.J. for ‘Millionaires Tax’ to Address Fiscal Crisis

New Jersey officials agreed on Thursday to make the state one of the first to adopt a so-called millionaires tax to alleviate shortfalls caused by the pandemic, intensifying a national debate over whether to increase taxes on the rich to help address widening income gaps.

Gov. Philip D. Murphy, a Democrat, announced a deal with legislative leaders to increase state taxes on income over $1 million by nearly 2 percentage points, giving New Jersey one of the highest state tax rates on wealthy people in the country. The agreement also includes an annual rebate of as much as $500 for families making less than $150,000.

“We do not hold any grudge at all against those who have been successful in life,” said Mr. Murphy, a former executive at the investment bank Goldman Sachs. “But in this unprecedented time, when so many middle-class families and others have sacrificed so much, now is the time to ensure that the wealthiest among us are also called to sacrifice.”

The tax deal comes at a moment when the country is enduring its worst economic crisis in decades and Washington has been unable to agree on a stimulus bill to provide more help to cities and states, which have resorted to cuts in services and other fiscal maneuvers to stay solvent in the face of mounting deficits.