We have seen notable small businesses up and down New Jersey announce permanent closures this year. Each has a unique story about why they made the difficult decision to shut down. But for many, the challenge of making ends meet over a prolonged period is the main reason.
These closures serve as a reminder of our jobmakers’ vulnerability in a state that has one of the nation’s most challenging business climates. The most recent addition to the list of rising business costs is a $1 billion unemployment insurance (UI) payroll tax increase.
On July 1, our businesses were socked with another $300 million installation of that $1 billion increase, resulting in hundreds of dollars in added taxes per employee for each employer for the second straight year.
This massive tax increase is unfair to our businesses. It was thrust upon them to replenish New Jersey’s UI trust fund, which was only depleted due to the nation’s longest business COVID-19 shutdowns and restrictions. Further, most states used federal relief funds to aid in replenishing their UI funds. Governor Murphy, however, opted to not do the same.
We are thankful for the financial assistance provided to the business community during the pandemic. But the reality is that those limited funds were overly targeted and did not help a greater number of New Jersey businesses. The total amount of aid is now offset by this UI tax increase, leaving many with a zero-sum gain or still in the red on state financial support.
The good news is nearly all legislators in Trenton understand the need to do right by our challenged small businesses as it relates to UI tax increases. In the spring, NJBIA worked closely with sponsors on a merged, compromise bill that would have provided tax credits to small businesses paying increased UI taxes.
That bill was unanimously passed by the full Assembly and the Senate Budget and Appropriations Committee in June. But it was pulled in the 11th hour just before a full Senate vote.
In the aftermath of that roadblock, all co-sponsors of the legislation have, thankfully, reaffirmed their commitment to work with the governor to provide real and meaningful UI relief for small businesses.
NJBIA is grateful for this continuing support, but the time to right this wrong for New Jersey businesses is overdue. With small business closures continuing, let’s understand that, for many, margins are slim and every dollar counts. We have an opportunity to reduce a major burden for our employers. Our policymakers and governor need to work together now to see it through.
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