New Jersey’s tax hike akin to taxing its own COVID-19 shutdown policies
A pair of nonprofit organizations devoted to New Jersey’s economic growth offered divided opinions on the value of a tax credit for small businesses designed to offset most of the unemployment payroll tax hike.
One, in fact, says the unemployment insurance payroll tax hike is almost like the state taxing its own COVID-19 shutdown policies.
Bill A3683 would provide $375 million to the Unemployment Compensation Revolving Fund, according to published reports. Another $170 million in corporate business and gross income tax credits set to equal tax hikes taking effect in July and in July 2023 would also be funded.
The state’s unemployment trust fund was emptied due to skyrocketing jobless claims during the start of the pandemic. Funding would come from the state’s surpluses.
“At a time when our state government has extraordinary amounts of excess cash on hand, small business owners will have to pay out more tax dollars this year only to get it refunded back to them when they file their taxes,” William J. Smith, spokesman for Garden State Initiative, told The Center Square. “That makes no sense whatsoever.”
Expect New Jersey’s unemployment rate to significantly lag the national average with policies like this, he said.
The New Jersey Business and Industry Association strongly supports the small business tax credit as it will offset most of the unemployment payroll tax hike, Christopher Emigholz told The Center Square. He’s the organization’s vice president for government affairs.
“Disappointingly, it is not doing anything for our larger businesses facing this same tax increase, and that only exacerbates New Jersey’s affordability and competitiveness issues, especially for those multi-state businesses,” he said. “I don’t know if anyone can say if this is enough, but this is a good bill that will provide significant help to many small businesses.”
Rather than a survival issue for small business, both organizations view it as New Jersey not doing as much as other states in affording its businesses competitive advantages.
Emigholz said the unemployment insurance payroll tax hike is almost like the state taxing its own COVID-19 shutdown policies.
“That is tough to understand for a New Jersey small business that did nothing wrong and saw the majority of states in the nation besides New Jersey put federal relief funds into the UI fund to avoid this tax increase,” he said. “Fortunately, this bill will do a lot to help small businesses avoid the worst of the UI tax increase resulting from the pandemic.”
Some small businesses did not survive the pandemic, and some are teetering on the edge that need as much help as they can get, Emigholz said.
“Small businesses have borne the brunt of the double-barreled impact of the pandemic and now skyrocketing inflation. Unless New Jersey’s economy starts growing at least as well as other states, they will continue to struggle,” Smith said.
Other states lowered taxes to attract jobs and business investment, and to lower the cost of living for residents, he said.
“Trenton should be prioritizing policies that drive job creation and retention in our state, not hoarding cash to protect their interests above everyone else’s,” Smith said.
Qualified businesses would have tax credits beginning in 2023 and 2024 based on potential increases in employer unemployment insurance in fiscal years 2023 and 2024, he said.
Small businesses as defined by the federal Small Business Administration would be eligible.
“This is not doing anything to offset the current year’s FY22 increase, but it will be a dollar-for-dollar credit for whatever increases occur in the second two years of the three-year phase-in, FY23 and FY24,” Emigholz said.
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