Gov. Phil Murphy and legislative leaders on Thursday announced a deal to raise taxes on millionaires and give the money to working and middle-class families.

But some state Republicans fear that the plan will drive people out of New Jersey, while progressive activists want the rebates to be a onetime thing.

“The agreement that we reached will provide much-needed tax relief for so many who can truly use a break. It'll make a tangible difference,” said state Assembly Speaker Craig Coughlin.

The deal entails a nearly 2% state tax increase on New Jersey residents making between $1 million and $5 million. Much of that tax revenue will be going to tax rebates for other state residents.

“Many of our middle class and working families were laid low when the steps we have had to take - painful steps I might add - to protect families and save lives from the pandemic meant that they couldn't go to work. Now we're going to help by giving them back some of what they lost,” Murphy said.

The tax rebates would include up to $500 for families with one or more children. Single parents are eligible up to $75,000 income or couples up to $150,000 income. If the plan is approved, checks would go out in the summer of 2021.

The biggest resistance to the millionaires tax had come from Democratic Senate President Steve Sweeney. But the senator said that the COVID-19 pandemic and Coughlin changed his mind.

“Until he came to me, I wasn't really there. But helping middle class families makes all the sense in the world to me at this time,” Sweeney said.

Progressive allies of Gov. Murphy have been fighting for the millionaires tax for years, but had hoped the revenue could be used to fund education and transportation projects.

“It's great that we are seeing a fairer tax code in New Jersey,” says Brandon McKoy of the group New Jersey Policy Perspective. “I do think there are better ways to deliver $500 of support and relief to families, and whether that's investing in our assets or resources to make them more affordable or expanding tax credit programs that are already in place, like the earned income tax credit or the child tax credit, that would be more sustainable.”

Republicans in the Legislature object to the move and say that it will hurt the Garden State.

“We've had one-party rule for so long that the Democrats don't fear the voters,” Assembly Minority Leader Jon Bramnick says.

Bramnick says that taxing the wealthy will increase the number of people moving out of New Jersey.

“They built a business, they worked hard and they created jobs. So, what you're going to say to those people is, well you're successful, and now what we're going to do is we're going to take 10% of your income, versus Florida that takes zero percent of your income,” he says.

The tax would go into effect on Oct. 1 if the state budget is approved by that day’s deadline.