CPA Poll Finds National, State Economies Stuck in Neutral

On Nov 21, 2014

The third annual survey of CPAs commissioned by the New Jersey Society of Certified Public Accountants (NJSCPA) and the Pennsylvania Institute of Certified Public Accountants (PICPA) finds the economy in a relative holding pattern among respondents when it comes to both national and state economic indicators.

U.S. Outlook

Not only do 45 percent of NJ respondents feel the national economy is about the same as it was one year ago, 51 percent of those same respondents expect the U.S. economy to be about the same one year from now.

New Jersey Outlook

Closer to home, 51 percent of Garden State respondents feel the NJ economy is about the same as one year ago, and 56 percent expect it to be about the same one year from now. This could be due to the fact that NJ respondents overwhelmingly (71 percent) feel that the business climate here hinders economic growth. Other areas where NJ respondents expect to see stalled growth: clients’ revenues (44 percent), clients’ workforce (65 percent), and clients’ salaries (51 percent).

In a bit of good news, in 2013 respondents cited rising health care costs (41 percent) and public pension funding (33 percent) as major reasons for inhibiting NJ economic growth. Those respective numbers for 2014 are significantly lower: rising health care costs (14 percent) and pension funding for public employees (18 percent).

Taxes

Nearly 9 in 10 respondents (87 percent) believe that NJ’s tax structure is worse than most states. It’s not surprising, then, that they cite high taxes as the number one reason (35 percent) for hindering future economic growth in NJ and the number two reason (33 percent) contributing to the state’s high unemployment rate.

As for NJ respondents’ number one recommendation to expand the state’s economy and grow jobs: reduce property taxes (35 percent); reduce the corporate business tax (20 percent); and reform estate and inheritance taxes (16 percent).

NJ Estate and Inheritance Taxes — With regard to estate and inheritance taxes, a whopping 83 percent of NJ respondents feel these taxes have prompted clients to leave the state. And, astoundingly, 71 percent have actually advised clients to relocate to another state due to NJ’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.

Gasoline Tax – When asked if New Jersey’s gas tax should be raised to benefit the Transportation Trust Fund, the numbers were pretty evenly split: 56 percent were in favor of an increase, while 44 percent were not.

Millionaires’ Tax – Approximately two-thirds of respondents (66 percent) opposed raising the marginal tax rate on incomes over $1 million, while 34 percent were in favor of an increase. The main reason for those in favor of an increase (63 percent) cited the ability of the state’s wealthiest to afford an increase. The key points of those who oppose a tax increase are 63 percent feel it will prompt wealthy residents and businesses to leave the state; 61 percent believe NJ needs less government, not more taxes; and 60 percent think Garden State residents are already the highest taxed in the nation.

The Next Economic Bubble?

One area to keep an eye on is student debt. The majority of NJ respondents (53) percent cite student debt as the next likely economic bubble. This is followed by the stock market (29 percent) and credit card debt (14 percent).

About the Study

The Franklin and Marshall College Center for Opinion Research University, on behalf of the NJSCPA and the PICPA, surveyed high-level CPAs in public accounting, industry, government, nonprofit and academia in New Jersey and Pennsylvania September through November 2014. There were 832 total respondents, with 414 based in NJ.

“While there are some things to like in these numbers, there’s a lot not to like,” says NJSCPA CEO and Executive Director Ralph Albert Thomas. “It’s clear that we need to tackle taxation issues—particularly the estate and inheritance taxes—now in order to make New Jersey more attractive for businesses and individuals going forward. Left unchecked, this could further erode the state’s tax base.”

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