NJBIA testified in support of legislation on Thursday that would provide tax credits to small businesses in industries with that have been impacted by the COVID-19 pandemic and ongoing labor shortage.
The Senate Economic Growth Committee unanimously approved the legislation, S-3759, sponsored by Senators Vin Gopal (D-11) and Nick Scutari (D-22), that would provide a tax credit to employers in retail, healthcare, services and hospitality that would be worth 10% of the wages paid to their employees earning near the minimum wage. The bill now goes to the Senate Budget & Appropriations Committee for consideration.
In his testimony before the committee Thursday morning, NJBIA Vice President of Government Affairs Christopher Emigholz said the targeted support in the legislation “will help the vulnerable small businesses that we are worried about without causing the long-term loss of tax revenue.”
“Losing a little revenue on these tax credits in the short term is far better than losing all the tax revenues these small businesses would have generated had they not gone out of business,” Emigholz said.
New Jersey’s current minimum wage for most employees will increase from $12 to $13 on Jan. 1, 2022. Emigholz noted in his testimony that NJBIA is not debating the increased minimum wage itself but said the tax credit was needed because of the increasing cost of doing business in New Jersey at a time when businesses have sustained substantial revenue losses because of the pandemic.
“Giving employers a 10% tax credit tied to the number of employees they have making close to the minimum wage will make that recurring annual wage increase more affordable,” he said. “Additionally, the industries targeted in this bill that have been hit harder by the pandemic are often the ones with more minimum wage jobs in businesses that are absorbing this wage increase without the revenue to sustain it.”
Senator Gopal that New Jersey’s small business sector sustained considerable losses during the course of the COVID-19 health emergency.
“Small employers had to cut workers, hours and services. Many of these establishments didn’t survive at all, and those who did continue to fight an uphill battle to get their businesses back up running and fully staffed,” Senator Gopal said. “These tax credits will provide a measure of relief to help ensure this most vital part of our state’s economy makes a full and speedy recovery.”
The committee amended the bill to remove a provision that would have increased the tax credit to 20% in counties where the jobless rate exceeds the state unemployment rate. To see Emigholz’s full written testimony, click here.