Will NJ’s next moves be better for business?

Two recent bills have been signed to improve New Jersey’s business climate and an announcement by Gov. Phil Murphy this week that he will allow a 2.5% corporate tax to expire at the end of 2023, as planned.

Could this be the start of a more positive New Jersey business-friendly trend by policymakers, or will the needle go no further?

I’m generally a glass-half-full girl, but I’m really optimistic that we could see the pendulum swing back to give New Jersey businesses, especially our small businesses, a little more relief and attention, said Michele Siekerka, president and CEO of NJBIA.

While we didn’t necessarily talk at length about aid to small businesses in the governor’s State of the State address this week, he did address other business concerns related to liquor licenses and boardwalks. We certainly heard those concerns last month at our Public Policy Forum.

So, as with all things, time will tell. Hopefully not too much time. These are the priorities we have fought for and will continue to fight for.

CBT Latest

About Bloomberg’s Balance of Power program this weekMurphy said he has agreed to end a 2.5% single payment that is expected to expire at the end of 2023.

I’m on the side of a deal is a deal, Murphy said. We promised that (the surcharge) would expire and disappear. And that’s where I am at the moment.

In 2018, New Jersey’s corporate tax rate rose from 9% to a national CBT high of 11.5% with the 2.5% surcharge. The so-called temporary increase was originally supposed to be reduced to 10.5% in 2020 and back to 9% in 2021.

However, the surcharge of 2.5 percentage points was extended by the legislator in 2020 until the end of 2023.

Speaking at NJBIA’s Public Policy Forum last month, Senate Budget Chairman Paul Sarlo said New Jersey should allow the extended corporate tax credit to expire at the end of 2023.

In a statement on ThursdaySarlo said he agreed with the Governors’ support in ending the surcharge when it expires at the end of the year.

That was our intention when it was first implemented, and I reinforced that commitment in December, Sarlo said. It is important that we keep our promises so that businesses can plan and work with confidence. Removing the surcharge will provide tax relief that will help fuel the economy and continue to ensure that New Jersey is an affordable place to operate.

However, Siekerka has suggested that more needs to be done to make New Jersey compete with regional states. She explained at NJBIA’s Public Policy Forum that Pennsylvania cut its 9.99% corporate tax rate by 1% starting in January and is on track to gradually lower the rate to 4.99% by 2031.

We don’t want to be dismissive of the sunset of the surcharge, Siekerka said. Yes, this is something that should happen. But it’s a big deal, and cheer the mountains when that happens.

At the same time, it really should be a step up given what our neighbors are doing with CBT. We do not want to remain a national outlier with this tax for competitive reasons.

Believe in enlightenment?

Councilor Gerry Scharfenberger and Councilor Victoria Flynn have already introduced legislation (A-4907) that would eliminate the 2.5% surcharge while lowering the CBT rate to 7.5%

And Murphy, for his part, hinted at other tax cuts during the Bloomberg interview as a possible part of his FY24 State Budget speech.

Siekerka noted in her post-State of the State statement that New Jersey businesses were excluded from the ANCHOR Property Tax Relief program even though they pay nearly half of the state’s property taxes.

In addition, we should remember that while others in New Jersey have received tax cuts, our businesses saw a $1 billion tax increase on unemployment insurance after the pandemic that forced many of them to close or impose extensive restrictions, she said.

Siekerka also credited a number of important steps recently taken by the Murphy administration to improve the business climate in New Jersey.

She cited the signing of Bill A-573 last week, which speeds up building inspections. She also noted last month’s signing of bill A-4929, bringing flexibility to New Jersey’s economic stimulus requirements.

These are all great things, and we look forward to working with the administration to find more ways to help New Jersey businesses, she said. However, we would like our small businesses to get that tax break in some way. They have faced so many policies in recent years that have lowered their bottom line and they have seen a major tax increase, without receiving any of the federal COVID recovery funds available to them.

If there is a significant relief, it will certainly be very much welcomed by the business community.