NJ Businesses Getting a $380 Million Tax Break
New Jersey businesses got some more good news on May 11 after Governor Chris Christie added another $180 million to his April announcement of $200 million in payroll tax relief. This represents the largest cut to unemployment business taxes in modern NJ history. Effective July 1, this should equate to a $100 break per employee for businesses.
The tax relief will come from the NJ Unemployment Trust Fund, which currently has a $1.8 billion surplus. However, that wasn’t always the case. From 1992 through 2005, various lawmakers and administrations used the fund to plug more than $4.5 billion in other budgetary shortfalls.
This left the fund far too depleted to cover a huge jump in the state’s unemployment rate to 10% during the Great Recession. Ultimately, New Jersey had to increase its payroll tax as well as borrow more than $2 billion from the federal government to meet the state’s unemployment claims. (30 other states had done likewise.)
Thankfully, a pair of initiatives changed the tide. First, NJ voters approved a 2010 measure protecting the unemployment trust fund against future raids in Trenton. Second, anti-fraud efforts by the Department of Labor and Workforce Development yielded $800 million in unemployment savings. This enabled the state’s unemployment trust fund to return to solvency in 2014, 2 years ahead of schedule. Combine that with far fewer New Jerseyans collecting unemployment, and the once-daunting deficit became a healthy surplus.
This is especially welcome news for New Jersey businesses that are currently facing potential legislation requiring paid sick leave and increasing the minimum wage.