TRENTON — Taxes that businesses pay into the unemployment fund are set to rise in July and again next summer, but the legislature could take steps to ease that financial bite.
A bill (A3683/2152) introduced Thursday by the Assembly’s Committee on Commerce and Economic Development would not eliminate a projected $216 million increase in taxes due in the fiscal year beginning in six weeks. Instead, it would give certain businesses tax credits equal to the increase, offsetting the impact.
Assemblyman Roy Freiman, D-Somerset, said more than 70 percent of New Jersey businesses would benefit from the bill, which offers no respite for large employers.
“What we’re doing here is good for our business community,” Freiman said. “We’re telling them, listen, we realize that the increases that are currently planned will have a negative effect, and with this bill, we will in effect give them a tax credit for all these increases that they may incur. »
Congressman Bob Auth, R-Bergen, said the bill is unnecessarily complicated and some small businesses won’t have time to deal with credits.
“They’re just going to drop him through the cracks. That’s not what we want to do here. You don’t want to do that here either,” Auth said. “You want to bring immediate relief to these people. And that’s what we should be doing, so this particular aspect of this bill is flawed.
The bill would provide tax credits that business owners could use to lower their corporate or income tax bills over the next seven years. They would be available from tax years 2023 and 2024, based on potential increases in unemployment insurance premiums seen between July 2022 and June 2024.
The bill also puts $375 million into a fund that would be used to repay federal loans used to pay unemployment benefits. This loan currently has no balance, but further borrowing is planned – which could lead to increased federal business taxes, if the loan has a balance in the last seven weeks of 2022.
Business groups pushing the state to use billions in federal funds to avoid payroll tax increases support the scaled-back alternative.
“Understanding the art of compromise, there is no perfect bill,” said Michael Egenton, executive vice president of the New Jersey Chamber of Commerce. “Would we rather have seen other components of this one?” Sure. But at the same time, it is something that is desperately needed.
Sheila Reynertson, senior policy analyst for New Jersey Policy Perspective, objected, saying the bill was unnecessary given the state of the economy and that the legislature was paying too much attention to corporations.
“Essentially another giveaway to cover a modest cost that they’re already being charged to pay and diverts resources that people, especially those who are still laid off, need right now,” Reynertson said.
Under the bill, the Department of Labor and Workforce Development would have to provide at least 30 days notice to employers when the unemployment insurance tax rate changes. They were told after last year that the rise had already started – although they knew more than six months earlier that a rise was coming, but not their exact rate.
The bill now heads to the Assembly Appropriations Committee for further consideration.
Michael Symons is the Statehouse Bureau Chief for New Jersey 101.5. You can reach him at [email protected]
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