The New Jersey Assembly recently passed legislation that will ease the burden of raising taxes on small businesses after rising unemployment claims during the pandemic depleted the state’s unemployment trust fund.
Now business leaders are pushing for the bill in the state Senate.
Businesses face about $ 250 million in added taxes this fiscal year and another $ 600 million or more in the next two years, according to the New Jersey Business and Industry Association.
The Assembly voted 78-0 to pass Bill A-3683. The measure will provide corporate business tax and gross income tax credits to small employers based on expected increases in their unemployment insurance contributions.
“We are putting money back in the pockets of small business owners, allowing them to expand and invest in their employees,” said majority leader Lou Greenwald, a sponsor of D-Camden. “Small business is the backbone of the economy. Their success is our success. This legislation will help alleviate a potential burden that could harm very small employers. “
The state Senate in early March proposed similar legislation aimed at replenishing the New Jersey Unemployment Fund with federal money to alleviate COVID. The measure was referred to the Senate Committee on Budgets and Appropriations on March 7 and is still awaiting a hearing.
A bill identical to the one passed by the Assembly was referred to the Senate State Labor Committee on March 24, but lawmakers have not yet taken any action on the measure.
“With only a few weeks left until the budget season and summer just ahead of us, small business support is urgently needed right now,” NJBIA Chief Government Officer Chrissy Buteas said in a statement. “It is imperative that the Senate publish and expedite these bills, which have the strong support of the Assembly, in a timely manner.”
Republican lawmakers have called on Gov. Phil Murphy to replenish the unemployment fund with $ 6.2 billion in coronavirus aid that the state received through President Joe Biden’s U.S. rescue plan adopted in March 2021.
Shortly after Biden signed the measure, New Jersey Republicans unveiled a proposal to spend the money, which included using $ 2.5 billion to stabilize the unemployment insurance fund and avoid raising employers’ taxes.
U.S. Sen. Declan O’Scanlon, R-Monmouth, called Democrat legislation on tax breaks “too complicated a scheme that doesn’t really stop raising the unemployment tax for small businesses in New Jersey.”
“Unlike Senate Republicans, they have proposed a direct replenishment of the unemployment fund with some of the billions the federal pandemic relief funds the state has received to prevent further damage to employers who are already struggling,” O said. Scanlon. “Many other countries have done exactly what we are proposing and have successfully avoided unnecessary increases in payroll taxes.
Sponsor Roy Freiman, D-Somerset, a sponsor, said the tax credits included in the bill would “help more than 70 percent of New Jersey businesses pay for planned unemployment tax increases.”
“With tax credits, we can offset the impact of any increase in the unemployment insurance tax that small businesses will see in the next few years,” Freiman said in a statement.
The New Jersey Chamber of Commerce and the NJBIA have issued numerous statements in support of the legislation, which also includes a measure requiring New Jersey to repay its federal loan to provide unemployment with money from the state’s general fund.
The president and chief executive of the New Jersey Chamber of Commerce, Tom Brackan, said filling the unemployment fund without tax increases was “a good move we have been pushing for since our business summit last month.”
“The New Jersey business community has been devastated by the blockade of COVID-19, and most companies are still dealing with the consequences,” Bracken said. “We believe that state leaders must reconsider all possible ways to help business.
The federal loan in New Jersey, used to maintain unemployment benefits, must be repaid by November to avoid a $ 75 million federal tax increase in addition to planned increases in the state’s user interface, NJBIA said.
“In addition to providing businesses with much-needed tax breaks, paying off this federal loan will prevent New Jersey from losing taxpayer dollars on unnecessary interest,” said Christopher Emigolz, vice president of government for the NJBIA. “That’s the responsible thing for New Jersey.”
The National Assembly voted 74-4 to pass a separate bill to ease small business, A-4222, which will help businesses during the busy summer season by expanding working hours for minors. This measure is also still awaiting a hearing in a Senate committee. The bills must be passed by both chambers of the state legislature and then signed by Murphy before becoming law.
“Time is of the essence for all these accounts, which are important for business,” Buteas said. “Businesses cannot afford to pass these bills before the legislature’s summer vacation. We respectfully ask the Senate to submit these bills to the Governor’s Office and for Governor Murphy to sign them.
To be eligible for tax credits if legislation crosses the finish line, employers will have to meet the US Small Business Administration’s definition of small business, which may vary by industry. Overall, companies with fewer than 1,500 employees or less than $ 40 million in annual revenue would be eligible.
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