The New Jersey Business & Industry Association testified in support of legislation that aims to avoid a massive spike in unemployment insurance (UI) payroll taxes in 2021 by way of more manageable payroll tax increases protracted over three years.
NJBIA Vice President of Government Affairs Christopher Emigholz told the Assembly Appropriations Committee in written testimony today that bill A-4853 would ease an impending $1 billion payroll tax increase by addressing both the business-specific experience rating and the rates driven by the overall health of the fund.
The Assembly Appropriations Committee voted 11-0 to release the legislation, sponsored by Assembly Majority Leader Louis Greenwald (D-6). The bill is now scheduled to be voted on by the full Assembly on Thursday, Oct. 29.
Emigholz said, without this legislation becoming law, “the payroll tax increase would penalize struggling employers who had layoffs that were beyond their control during the pandemic.”
“Additionally, it is important to keep in mind that a payroll tax increase is potentially worse than other taxes because it is based on jobs,” he said.
New Jersey businesses are facing a looming increase in unemployment payroll taxes in July 2021 due to the large, and continuing, draw made on the state’s Unemployment Insurance Trust Fund.
Individual companies pay different UI rates, set in a series of tiers and columns, based on their layoff experience and the financial health of the UI trust fund. New Jersey is currently in column B, which represents the second lowest UI tax rate available. If nothing is done, that rate will go right to the maximum, column E+10%.
“Slowing down the increase in the columns that determine payroll tax rates for all employers will help them avoid an enormous tax increase while the economy is still anticipated to be struggling next year,” Emigholz said.
“A-4853 spreads a predictable and more manageable phase-in of the required UI tax increase over time instead of all at once.
“This will hopefully help employers recover from the COVID-19 downturn before they have to worry about paying the higher UI rates. The bill also thoughtfully includes a downward rate adjustment if the UI fund naturally recovers faster than expected.”
To see Emigholz’s full testimony click here.