In testimony before the Senate budget committee on Tuesday, NJBIA urged lawmakers to improve the proposed $48.9 billion FY23 state budget so that it provides more tax relief and pro-growth investments to make New Jersey more regionally competitive and affordable for New Jersey businesses.
“The budget does not do as much as it could and should for business affordability,” NJBIA Vice President of Government Affairs Chris Emigholz told the Senate Budget & Appropriations Committee at its first online public hearing on the FY23 state spending plan for the fiscal year that starts July 1.
Emigholz commended the positive aspects of the budget, such as no new proposed taxes, a 100% payment to the state public employee pension system for the second year in a row, more funding for the Rainy Day Fund and additional debt defeasance – all moves that set New Jersey on the path to affordability. NJBIA also supports the budget’s investments in pro-growth areas such as workforce development, innovation and infrastructure that will make the state more affordable for businesses.
However, there are ways to improve the FY23 budget and make New Jersey more affordable, he said.
“We appreciate holding the line on new taxes, but we need broad-based tax relief to better address affordability for all,” Emigholz said. “Competitiveness matters. We are less affordable than other states and we are an outlier on taxes.”
New Jersey is an outlier on corporate income taxes with a top rate of 11.5% – the highest in the nation, Emigholz pointed out. Our neighbor, Pennsylvania, has the second highest rate in the nation (9.9%) but Gov. Tom Wolf is seeking to cut his state’s corporate income tax rate by half.
Emigholz said New Jersey is also an outlier on the way it taxes income earned abroad by U.S.-controlled foreign corporations – a category of taxes called global intangible low-taxed income (GILTI).
“We are a negative outlier on foreign income – one of the few states that taxes it at all and the highest rate of anyone that does,” Emigholz said. “We should follow New York’s lead with their recent reduction,” he said, referring to the 2019 New York law that provides a 95% exclusion from that state’s corporate income tax for any GILTI amounts recognized for federal tax purposes.
Emigholz also asked the committee to incorporate other pending tax relief and economic growth bills that have recently advanced or become law as part of the FY23 budget process. These include:
- S-330 (Singleton, D-7/ Scutari D-22) that would help reduce property taxes for residents and businesses by increasing the distribution to municipalities from the Energy Tax Receipts Property Tax Relief Fund. Emigholz said this legislation, which requires a corresponding reduction in the municipal property tax levy, would lower property taxes by 1%. (Passed Senate).
- S-733 (Madden, D-4/ Singleton, D-7) which would reduce the looming payroll tax increase that employers face because of the record high unemployment claims paid out during the pandemic. The bill would use unspent federal pandemic relief funds to simultaneously save employers more than $300 million in unemployment insurance tax increases, as well as pay off a federal UI loan to avoid any unnecessary interest payments. (Passed Senate Labor Committee).
- S-1754 (Beach, D-6/Testa R-1) which would provide an additional $1 million to launch a marketing/branding campaign that promotes innovation and manufacturing in New Jersey. (Passed Senate State Government Committee).
- A-2455/S-2204 (Benson D-14, Greenstein D-14) Emigholz asked for a $1 million appropriation for the new law’s Robotics Competitions in Schools Fund to attract the next generation of workers into STEM and more technical jobs like manufacturing. (Became law last year).
Go here to read Emigholz’s written testimony submitted to the committee.