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Christie Hands New Jersey Business a Bonus: $380 Million Cut in Payroll Taxes

Friday, May 13, 2016   (0 Comments)
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NJspotlight.com 05/13/16

New Jersey businesses already thrilled with a $200 million payroll tax break coming this summer thanks to the improved condition of the state’s unemployment trust fund got even better news yesterday. The size of that tax cut will now nearly double due to the fund’s expanding surplus. Business lobbyists praised the news of the increased payroll tax cut, which will equal on average roughly $100 per employee starting this July. And they said it comes at an especially good time since several pieces of legislation opposed by the business community, like requiring earned sick leave and increasing the minimum wage to $15, have been advancing in the Democratic-controlled Legislature. “This is hugely positive,” said Tom Bracken, president of the New Jersey Chamber of Commerce. “It’s a doubling up of good news.”

The explanation for the payroll tax break is rooted in both the structure of New Jersey’s Unemployment Insurance Trust Fund and the fairly steady improvement in the state’s economy that’s occurred over the last year.  Christie, speaking outside the headquarters of New Jersey Manufacturers Insurance Co., said the fund’s surplus has now swelled to nearly $2 billion, allowing for the latest easing of the payroll tax starting July 1. He had previously announced a cut of $200 million, but he said more precise numbers now available show it will instead total $380 million. “It’s always good to be governor and to be able to announce taxes are going down,” Christie said during the event. Though the condition of the trust fund was one of the state’s biggest financial headaches when Christie, a Republican, took office amid recession in early 2010, he said it’s now become one of his administration’s success stories.

A tax break of $100 per employee may not seem like a lot, but Michele Siekerka, president of the New Jersey Business & Industry, said it can be significant for small businesses working on a tight margin. “Any time you bring relief to small businesses is a good day,” Siekerka said. She also predicted the tax cut would likely lead to more hiring, more investment and an increased use of technology by her organization’s members. Bracken, the chamber of commerce leader, said the news of the tax cut also sends a strong signal to a business community that has been concerned about several bills making their way through the Legislature in recent weeks. They include a proposal that would require businesses both large and small to provide their employees with earned sick leave and legislation seeking to increase New Jersey’s current $8.38 minimum wage eventually up to $15. “This is the kind of stuff, unfortunately, that we need more of,” Bracken said, speaking about the $380 million payroll tax cut.


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