NJ small businesses could get tax relief under new bill
New Jersey businesses are grappling with nearly $1 billion in tax increases over the next three years after a surge in jobless claims during the pandemic depleted the unemployment insurance trust fund of State.
State lawmakers are now seeking to ease some of that burden with legislation to provide tax credits to small employers based on expected increases in their unemployment insurance premiums.
Businesses face about $250 million in additional taxes this fiscal year and another $600 million or more over the next two years, according to the New Jersey Business and Industry Association.
A bill, A-3683sponsored by Democratic Assemblymen Roy Freiman, Louis Greenwald and Chris Tully, would offer corporate and gross income tax credits to small businesses that did not use other grants to compensate increases.
“This legislation will help more than 70% of New Jersey businesses pay planned unemployment insurance tax increases,” Freiman, D-Somerset, said in a statement released Thursday.
The measure, which was approved by the House Committee on Commerce and Economic Development on Thursday, would also require the state Department of Labor to provide a minimum of 30 days’ notice to employers when the unemployment insurance rate will change.
Assembly Majority Leader Lou Greenwald, D-Camden, said the legislation will help relieve some of the pressure on small businesses that “are the backbone of the economy.”
“We put money back in the pockets of small business owners, allowing them to grow their businesses and invest in their employees,” Greenwald said in a statement.
When New Jersey’s Unemployment Insurance Trust Fund became less solvent during the pandemic, a formula used to determine corporate contributions triggered automatic tax increases, according to Christopher Emigholz, vice president of government affairs at the NewJersey Business and Industry Association.
“The fund has been depleted more than at any time in history, and now it needs to be replenished,” Emigholz told NJ Advance Media in an interview last month. “Other states have taken steps to use federal funds to offset this tax increase.”
Republican state lawmakers have called on Governor Phil Murphy to replenish the fund with some of the $6.2 billion in coronavirus aid the state received as part of President Joe Biden’s U.S. bailout promulgated in March 2021.
Shortly after Biden signed the measure, Republicans in New Jersey unveiled a proposal to spend the money that included using $2.5 billion to stabilize the unemployment insurance fund and avoid the employer tax increases.
The Murphy administration has yet to release a detailed plan for more than $3 billion in federal coronavirus relief money that remains unallocated. Murphy took control of that money in his latest budget proposal by removing the role of the Legislative Assembly in approving the use of those funds.
Adding to billions in unspent federal aid, New Jersey Treasurer Elizabeth Muoio told lawmakers this week that her department expects the state to collect $51.4 billion in tax revenue for the current fiscal year ending June 30, more than $9 billion higher than revenue estimates certified by Murphy last July.
In a statement on Thursday, the NJBIA said it “strongly” supports the small business tax relief legislation and a separate bill attached to it that calls on New Jersey to repay its federal loan. unemployment insurance with money from the state’s general fund.
“Failing to pay off this loan ASAP when our state is swimming in billions in surpluses and federal relief aid would be like putting and leaving money under your mattress, instead of paying credit card bills. credit to avoid unnecessary and costly interest and charges. ,” Emigholz said in the statement.
The Assembly Committee also voted on Thursday to advance a separate measure, A-3708to allow businesses to continue using tents and other facilities until the end of November 2024.
The current law authorizing these uses, which expires in November, was enacted to allow the restaurant industry and business community to continue operating despite widespread lockdowns during the pandemic.
The legislation still needs to be approved by the entire state Assembly and Senate and signed by Murphy before it becomes law.
To be eligible for credits if the invoice crosses the finish line, employers will need to meet the requirements of the US Small Business Administration small business definition, which may vary by industry. Generally, businesses with fewer than 1,500 employees or less than $40 million in annual revenue would qualify.
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Derek Hall can be reached at [email protected]. Follow him on Twitter @dereknhall.