Making it in small business is never easy, but increasing proof of that has been found in New Jersey headlines all year. From historic landmarks to newer establishments, notable small businesses up and down the state have recently announced their permanent closures at an alarming, post-pandemic rate.
Every closing business has a unique story as to why it made the difficult decision to shut down. But, at the root of it for many is the basic challenge of making ends meet over a prolonged period.
Which brings us to New Jersey, perennial home to one of the nation’s most challenging business climates due to high taxes and fees, overregulation and policy decisions that cumulatively add to the considerable odds of having a business succeed here.
The most recent, and unnecessary, addition to the list of exorbitant business costs for New Jersey employers is a $1 billion unemployment insurance payroll tax increase.
On July 1, New Jersey businesses were sacked with yet another $300 million installation of that $1 billion increase, resulting in hundreds of dollars in added taxes per employee for each employer for the second straight year. This is amid the promise made last year by Gov. Phil Murphy of “no new taxes.”
As we’ve stated for well over a year, this massive tax increase is wholly unfair to our businesses. It was thrust upon them to replenish New Jersey’s UI trust fund — which was only depleted due to the nation’s longest business COVID-19 shutdowns and restrictions. Something they had no control over.
This $1 billion tax increase was as avoidable as it was inappropriate. Most states in the nation used federal relief funds to aid in replenishing their UI funds. Murphy, however, opted to not use those funds to help New Jersey businesses.
While thankful for the financial assistance that was provided to the business community during the pandemic, the reality is that those limited funds were overly targeted and did not help many businesses. The total amount of that aid is now offset by this massive payroll tax increase, leaving many of our businesses with a zero-sum gain or still in the red on state financial support.
The good news is nearly all our legislators in Trenton understand the need to do right for our challenged small businesses as it relates to UI tax increases.
Over the spring, the New Jersey Business & Industry Association worked closely with sponsors on a merged, compromise bill (A3683/A2152/S733/S2378) that would have provided tax credits to small businesses paying increased UI taxes. The bill also required the state to repay its federal UI loan before triggering another $75 million federal tax increase in November.
That bill was unanimously passed by the full Assembly and by the Senate Budget and Appropriations Committee in June. However, as widely reported, it was removed from the ledger at the 11th hour, just before a full Senate vote in late June.
In the aftermath of that roadblock, Sens. Vin Gopal (D-Ocean Twp.) and Fred Madden (D-Turnersville), co-sponsors of the legislation, thankfully reaffirmed their commitment to work with Murphy to provide real and meaningful UI relief for small businesses this fall.
On the Assembly side, Roy Freiman (D-Hillsborough) and Majority Leader Louis Greenwald (D-Voorhees) also maintain their commitment to the cause. It’s also worth noting that Murphy also said he was open to revisiting the discussion in the fall.
NJBIA is grateful for this continuing support from the sponsors and the lawmakers on both sides of the aisle who voiced the need to bring meaningful UI relief to impacted businesses. We stand at the ready to roll up our sleeves again to make it happen.
With small business closures continuing up and down the state, let’s understand that, for many, margins are slim and every dollar counts. We have an opportunity to reduce a major burden here for our employers. With the fall now upon us, our policymakers and our governor need to work together now to see it through.
Michele Siekerka is CEO of the New Jersey Business & Industry Association.