By Michele N. Siekerka, NJBIA President and CEO On Jun 28, 2023
The state’s new fiscal year starts on July 1, and the most destructive fallout from the state budget process that got us to that day was the vilification of New Jersey’s large businesses.
As part of an agenda to stop the temporary 2.5% surcharge levied on top of the state’s 9% Corporation Business Tax from sunsetting as required by law, progressive groups used budget hearings to malign New Jersey’s largest companies. They wrote op-eds that broadly smeared all large employers with specious references to “record profits” and even “tax evasion.”
Anti-business groups are portraying the statutorily required sunset of the temporary CBT surcharge on Dec. 31 as a “tax break” for corporations. The truth is they want lawmakers to break their promise to the business community and turn a temporary surtax introduced in 2018 into a permanent surtax, ensuring New Jersey remains an outlier with the nation’s highest corporate income tax rate (11.5%).
Being an outlier with the CBT is a dangerous place to be, particularly when our neighbor, Pennsylvania, and other states are making calculated and concerted efforts to reduce their corporate tax rates to be more competitive. Even worse, New Jersey is also an outlier on other cost-drivers for business, including individual income taxes and property taxes.
Adding insult to injury, New Jersey businesses are also being hit with a third massive increase in unemployment insurance payroll taxes starting this month that will have increased taxes by well over a billion dollars since before the pandemic. New Jersey could have used federal coronavirus aid to replenish the state unemployment insurance trust fund, but as of this writing, has not. Instead, concerns were expressed about the optics. Averting this tax hike on businesses was not a priority to policymakers even though it was their strict state COVID-19 mandates that ordered non-essential New Jersey businesses to close early in the pandemic, causing the soaring unemployment that depleted the state Unemployment Insurance Trust Fund.
Businesses spur innovation and provide steady jobs. They produce most of the food, clothing, electricity, transportation, communications, and technology we use every day. Advancements in medicine, energy and tech are possible because of the investments businesses make. Instead of bullying large companies, we must be bullish about them. Large companies provide higher wages, health benefits and retirement accounts for their workers. They are prioritizing diversity, equity and inclusion initiatives and putting environmental, social and governance (ESG) metrics into their missions. Businesses can do well by doing good! Let us adopt that mantra – one which positively impacts our workforce, our communities, and our state economy.
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