It’s no secret that high taxes are a huge problem in the Garden State. Gov. Phil Murphy even said recently that New Jersey is “not your state” if taxes are one of your top concerns.
The 2017 federal tax cuts were a major source of relief, but many of our state’s small businesses won’t notice any savings if Trenton continues to raise state taxes and institute costly mandates. Instead of scaring Jersey’s small businesses away, our state leaders should follow Congress’ example and cut taxes, not raise them.
New Jersey’s local businesses are run by honest, hard-working people, but our tax situation is bleak. The nonpartisan Tax Foundation just ranked the state dead last for its horrible business tax climate.
Murphy has made this worse. Besides wanting to raise taxes, he’s pushed for changes to the rules governing local businesses, and all these changes would be expensive. He signed expanded paid leave benefits, which may sound good on paper, but actually cost workers more in the form of higher taxes. And if the governor has his way, he’ll use executive power to institute costly new overtime rules, which could pose a major challenge for mom-and-pop shops and new businesses.
This isn’t the kind of leadership New Jersey needs now. If Murphy cared about small business owners, he’d have done what members of Congress did a few years ago to provide tax relief for these critical players in the Garden State’s economy. The 2017 tax reform singled out small businesses with deductions designed to give most of them lower tax burdens across the board.
The National Federation of Independent Business recently asked our members how the tax cuts affected them, and nearly two-thirds of them across the rest of the country said the cuts are benefiting them personally.
In fact, small businesses in other states are thriving. Around a quarter of the small businesses we asked said they were using tax savings to give their employees raises. This matters for working families, who could always use some extra money in every paycheck.
About 15% of small businesses expanded hiring, which is crucial, because small businesses already create the majority of new jobs in America. And over 25% of small businesses we asked are using money saved from lower taxes to make their businesses stronger and more resilient, increasing business investment or using it to expand their operations.
These changes could make a big difference in New Jersey, where 99% of the enterprises are classified as small businesses. Unfortunately, our tax climate is so awful that few of the small businesses across the state will notice that change.
That’s why it’s critical that our representatives in Washington protect federal tax cuts, particularly the deduction for small businesses — and, hopefully, set an example for Trenton. Although Congress gave large corporations a permanent reduction in rates, this critical provision of the 2017 tax reform is set to expire in 2025.
U.S. Reps. Jeff Van Drew and Josh Gottheimer (both D-N.J.) support the bipartisan Main Street Tax Certainty Act, which gets rid of this short shelf-life and makes federal tax relief permanent for small businesses. With Murphy on a tax spree, it’s critical that every New Jersey member of Congress — on both sides of the aisle — join Van Drew and Gottheimer to get this bill passed.
It’s a credit to the hardworking people who run small businesses that they show up to work every day in spite of all the taxes and red tape the governor throws at them. Congress took the side of small business when it cut taxes. Now, our leaders in Trenton should do the same.
Laurie Ehlbeck is the state director of the National Federation of Independent Business in New Jersey, a small business association that represents thousands of members in the state.