While much has been made about a new $1 billion-plus tax on New Jersey employers as part of Gov. Phil Murphy’s FY25 budget proposal, there was a sad reminder this week that state businesses have already been hit by a $1 billion tax recently.
While much has been made about a new $1 billion-plus tax on New Jersey employers as part of Gov. Phil Murphy’s FY25 budget proposal, there was a sad reminder this week that state businesses have already been hit by a different $1 billion tax recently.
During his testimony before the Senate Budget Committee, New Jersey Department of Labor and Workforce Development Commissioner Robert Asaro-Angelo noted that the state’s Unemployment Insurance Trust Fund is currently at about $1.3 billion and possibly on the way to $2 billion by the end of the year.
After being depleted during the pandemic, the state’s UI trust fund has mostly recovered on the backs of an additional $1 billion-plus UI tax on employers assessed since 2022.
“This is important for two reasons,” said NJBIA Chief Government Affairs Officer Christopher Emigholz. “First, it’s a reminder that our job creators are still paying hundreds of dollars more per employee than they were prior to COVID for a tax that was essentially avoidable. And we continue to see small business closures where that added tax did not help.
“Secondly, the discussion lends itself to a greater review of New Jersey’s overall business climate. You’d be hard-pressed to find a state that has had two separate $1-billion-plus tax hikes on employers basically within the span of a couple of years. This is one of the reasons why we say that our policymakers need to do better for business.
“It’s just much more difficult to compete with such excessive business taxation,” Emigholz added.
Currently, NJBIA and the business community are fighting Gov. Murphy’s proposed $1 billion-plus Corporate Transit Fee on the state’s largest employers – which will return New Jersey to having the top corporate tax rate in the nation, by far, at 11.5%
The fight against the UI tax increase was steeped in just how avoidable it was.
Most states used federal Covid relief dollars to aid in replenishing their state UI funds. Gov. Murphy chose not to use them for that purpose, despite the fact New Jersey had the longest shutdown and restrictions in the nation.
NJBIA had worked closely with sponsors on a merged, compromise bill that would have at least provided tax credits to small businesses paying increased UI taxes.
It was unanimously passed by the full Assembly and by the Senate Budget and Appropriations Committee in late June of 2022 as part of budget proceedings.
But the Murphy administration pulled it from the ledger just before a full Senate vote that would have sent the bill to his desk.
“Obviously, this much taxation does not send a good message about our overall business climate,” Emigholz added. “But statistically, these types of tax increases really add up and it sends a chilling message to any employer looking to stay here, grow here or move here. It’s a much heavier lift to get a return on your investment.”
