As this column goes to press, we don’t know yet if the Legislature has resisted the governor’s efforts to expand the income tax in the next state budget, or even whether the July 1 budget deadline was met. What we do know is that these past 18 months have been a challenging time to be a New Jersey business owner.
Gov. Phil Murphy ran for office on a progressive agenda and, with the help of a Legislature controlled by the same political party, has managed to check off 90% of the boxes on his list of 52 major campaign promises. As many of these promises resulted in higher costs of doing business in the state, now it’s time to give the business community a chance to play catch up by resisting any further tax increases or costly workforce mandates.
The minimum wage rose to $10 an hour July 1, and will reach $15 an hour on Jan. 1, 2024. The state’s new mandatory paid sick leave, extended paid family leave, and an array of energy and other regulatory mandates are now in effect, costing businesses more time and money. A year ago, New Jersey’s corporate business tax became the second highest in the nation. And as I write this column, the tax incentives established years ago to keep our high-tax state competitive are about to expire, leaving New Jersey ill-equipped to attract new businesses and retain those still here.
The administration’s pledge to build a “stronger and fairer economy” must include the needs of the business community too. Tax increases and costly mandates wipe out the profits businesses rely on to update equipment, produce innovative technologies, and create new jobs. Ignoring this reality creates economic policy that discourages business startups, consigns established companies to stagnation, and pushes smaller businesses to their breaking point.
During the state budget debate about whether to expand New Jersey’s highest 10.75% income tax bracket to include more households, as well as small businesses that flow their income through personal tax returns, exasperated business owners began speaking out as never before. Trenton manufacturer Tektite Industries, for example, echoed the frustrations of many small companies in an ROI-NJ newspaper op-ed announcing it was looking to relocate to Pennsylvania because New Jersey’s high taxes and added workplace mandates have made it too expensive to do business here.
Tektite President Scott Mele wrote that even factoring in the need for new infrastructure in a new location, their accountants had compared the costs of doing business in New Jersey to Pennsylvania and estimated those relocation costs could be recouped in three years.
Tektite’s story is not anecdotal. The New Jersey Society of Certified Public Accountants pointed out in a recent Asbury Park Press op-ed that 75% of CPAs surveyed had advised some of their clients to relocate homes or businesses to reduce their tax burden.
New Jersey businesses need a chance to catch their collective breath so they can plan for how they will adjust their business models and pricing to address the new laws and regulations impacting their bottom line. We ask that our state leaders impose a moratorium on any new taxes and mandates, and give our New Jersey businesses the predictability they need right now so that they can make their operations more efficient in the face of higher costs.
Equally important, our businesses need to hear a positive message from Trenton recognizing their importance as job-creators and their positive economic impact on our state’s economy.
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