the Biggest Tax Increase of All?
the staff of the Ridgewood blog
Trenton NJ, The state budget approved by the legislature today includes borrowing $4.5 billion and increased taxes on corporations, millionaires, and Health Maintenance Organizations. What’s not in the limelight today is the expected increase in unemployment taxes that will fall on every business next year to pay for the massive number of New Jersians who have filed for unemployment benefits.
“What you aren’t hearing much about today as this budget is approved is a bomb of a tax increase that will explode next year and fall on every business in the form on drastically higher unemployment taxes,” said NFIB’s State Director in New Jersey, Eileen Kean. “Those taxes automatically rise when the Unemployment Trust Fund becomes depleted, and we learned last week they are expected to go up by nearly a billion dollars next year. If small businesses haven’t already permanently closed during the pandemic-related economic crisis, this could be the final nail in the coffin.”
Last week the Office of Legislative Services estimated that the unemployment payroll tax for employers would rise by $919 million next year, which pales in comparison to the amount raised by other tax increases in today’s budget. Increases in the employer payroll tax automatically rise when the Unemployment Trust Fund is depleted. The state has already taken a line of credit from the federal government to cover the deficits in the fund.
“Our leaders must act now to find alternative sources of money to return the Unemployment Trust Fund to solvency,” added Kean. “Other states have used CARES Act funds to prevent further economic harm to businesses. As we all know, small businesses are hurt the hardest and they can least afford such a giant-sized tax increase. If we seek an improved state economy, this particular tax will discourage any hiring or the creation of any new jobs.”