NJ must ease unemployment tax burden it helped inflate | Editorial
For many years, corporate taxes and regulatory zeal in New Jersey have done much to discourage investment and jobs. As a result, residents are poorer, with fewer job opportunities, lower wages, and higher taxes themselves.
As it has for the past decade, this year New Jersey leads the nation in imposing the highest tax burden on businesses, according to the nonpartisan Tax Foundation. The state government is the anti-corporate king because it ranks among the worst for nearly every major tax – corporation tax, personal tax, sales tax, and property tax.
The only business tax where New Jersey was simply worse than average was unemployment insurance tax. This year, the state’s ranking on this is also plummeting.
Something must and can be done about it. A bill from the state Legislature would use federal COVID funds to mitigate unemployment tax spikes to cover record unemployment benefit payments made during the pandemic. It should be enacted for many reasons.
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The state government itself is responsible for much of the unemployment and benefit payouts, since Governor Phil Murphy shut down and then slowed the economy more than the pandemic required. A large number of fraudulent unemployment claims have been paid by his Department of Labor and Workforce Development, but how many he can’t or won’t say. New Jersey businesses are already paying $252 million more in unemployment taxes this year to replenish the state’s unemployment insurance trust fund. Next year they will pay another $296.6 million. The bill would only modestly spare businesses from paying a massive third $336.4 million unemployment insurance payment in fiscal year 2024.
Frankly, the state should use some of the many billions given to it by the US bailout to repay federal funds borrowed to cover pandemic unemployment benefits and to replenish its unemployment fund to normal levels. Helping states recover financially from the pandemic was the intention of this US boon. The New Jersey Business Coalition of 100 companies, however, has already compromised on this, and would settle for paying $557 million and be spared the smallest payout in two years. The Senate Labor Committee approved the bill earlier this month, sending it to the Committee on Budget and Appropriations. Assembly Majority Leader Louis Greenwald, D-Burlington, Camden, introduced an identical bill that sits in the Assembly’s Commerce and Economic Development Committee.
This particular excessive burden on businesses directly discourages employment in New Jersey. Since the amount of the unemployment tax depends on the number of employees, companies can reduce their contribution to these massive compensation payments by reducing their workforce.
The Legislative Assembly and the Governor should ease this lingering pandemic burden on business through the state’s federal grant for these purposes, and not make the worst state for business even worse.