The year 2020 has been like no other. Yet, it seems nothing changes in Trenton.
I was taken aback when Gov. Phil Murphy and legislative leadership presented their agreement on so-called middle-class tax relief — in exchange for an income tax increase that will hurt our already-beleaguered businesses.
The $500 rebate proposal may have made for a nice soundbite. But the fact is, this short-term payment, payable almost a year from now, comes in exchange for further long-term debt that will be repaid by these same taxpayers, along with every other taxpayer now and for generations to come.
In fact, this added debt service comes just as New Jersey earned the top ranking as the most indebted state in the nation. It’s yet another entry in New Jersey’s nefarious Economic Book of Lists, which includes one of the highest property taxes in the nation, the soon-to-be highest corporate business tax (11.5%) — thanks again to this Fiscal Year 2021 budget — and the second-highest income tax rate (10.75%), behind California.
These tax increases were initially proposed by the governor as necessary to fill budget holes caused by COVID-19. Clearly, that proved to be false. Rather, it’s an additional spending line item, unrelated to COVID-19, that won’t help more of the people who are leaving New Jersey due to affordability. These are our young adults just out of college, our retirees and our job creators who are somehow seen as an endless fiscal trough during a pandemic.
Further, in addition to the tax increases, Murphy’s budget unnecessarily called for $4 billion in borrowing, even with a budget surplus. After agreeing with the governor’s tax hike, did our legislative leaders address the unnecessary borrowing? You bet they did. They raised it to $4.5 billion, and added another $300 million in spending.
So the debacle that is the FY21 budget comes down to this: Tax relief in New Jersey can only come when there’s increased spending, needless borrowing and higher taxes. What am I missing?
At the New Jersey Business & Industry Association, we submit that real tax relief can be found when fixing what’s structurally broken and making New Jersey more affordable. We have been proud to support the proposals found in the Path to Progress report over the past two years, which would go much further than the tax rebate gimmick accepted by the majority of our policymakers.
These reforms would address broken systems that cause us to dedicate so much of our revenues to debt and pension obligations, instead of education, workforce development, community investments, infrastructure and safety net programs.
Real tax relief means not saddling our current and future generations with yet more debt service payments for decades to come when New Jersey is already at the fiscal cliff.
Real tax relief means making New Jersey’s business climate regionally competitive. Now, when business owners are looking to flee from New York City, and remote work makes it too easy to run a business from anywhere, we should be doing everything possible to make our state more business-friendly, not less.
Real tax relief in New Jersey demands a comprehensive plan that looks longer term, without relying on tactical budgets and one-shot gimmicks that this administration has chided in the past.
But the time for action — not talk — on this comprehensive plan is now. New Jersey’s economic ship has tipped, with taxed-out and maxed-out residents and business owners thrown overboard and sinking fast.
There’s still time left in 2020 for Trenton to show it can change. But only if it can truly commit to a true lifeline of tax relief.
Michele Siekerka is CEO and president of the New Jersey Business & Industry Association.