New Jersey’s estate and inheritance taxes are among the worst in the nation and hurt the business climate by reinforcing the state’s high-tax reputation, according to the New Jersey Business & Industry Association and the New Jersey Society of CPAs.
“New Jersey’s twin death taxes are devastating to the state’s family-owned businesses, as well as the state’s economic climate” said NJBIA President Michele Siekerka. “We are one of only two states that have both an inheritance and an estate tax, and we’re the only state whose estate tax exemption threshold is under $1 million. For businesses considering a long-term commitment to New Jersey, this is a huge issue.”
“Unfortunately, New Jersey’s death taxes are the worst in the nation. A recent survey found that 71 percent of our members felt a fiduciary responsibility to advise clients to move to another state because of these taxes,” said Ralph Albert Thomas, the NJCPA CEO and Executive Director. “The NJCPA strongly believes that reducing or, better yet, eliminating the state’s onerous death taxes will increase New Jersey’s tax base and ultimately improve the state’s economy.”
The two organizations have called for reform to New Jersey’s death taxes as a way to strengthen New Jersey’s business climate.
A survey by NJCPA found that 83 percent of respondents feel estate and inheritance taxes have prompted clients to leave the state, and 71 percent have actually advised clients to relocate to another state due to New Jersey’s estate and inheritance taxes. A strong majority (84 percent) think these taxes impact the state’s middle class just as much as the affluent.
Similarly, a report by The New Jersey Policy Research Organization (NJBIA’s nonprofit policy affiliate) concluded that high tax rates contribute to New Jersey’s outflow of wealth, which in turn has cost New Jersey billions of dollars in state revenue.
“It is important to prevent a further exodus of wealthy residents and possibly encourage some who had left to return,” said Siekerka. “This would help spur economic growth in a state heavily dependent upon small businesses that are often passed down from one generation to another.
“Many employers often take big risks to start their venture and make tremendous sacrifices to create a successful business,” Siekerka said. For others, it’s about the family, with some businesses being passed on from one generation to the next. Whatever the case, small businesses will want to protect what they worked so hard and so long to create. Unfortunately, if they are in New Jersey, that means right now, they have to consider moving to another state.”