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TAX AND SPEND: New Jersey Employers Facing $1 BILLION HIKE in Payroll Taxes

(The Center Square)(October 23, 2020)-- – The New Jersey Assembly Labor Committee advanced a bill that would slow down the imposition of an estimated $1 billion payroll tax increase on New Jersey businesses. Screen Shot 2020-10-19 at 17.57.39

Unemployment taxes in the state are determined by tiers based on unemployment rates and layoffs. New Jersey was in the second to lowest tier, but the job losses due to the pandemic threaten to raise employers to the highest tier.

The bill, labeled A-4853, would spread the increase over two years.

“Slowing down the increase in the columns that determine payroll tax rates for all employers will help them avoid an enormous tax increase while the economy is still anticipated to be struggling next year,” said Christopher Emigholz, vice president for government affairs for the New Jersey Business and Industry Association, in written testimony to the committee. “A-4853 spreads a predictable and more manageable phase-in of the required UI tax increase over time instead of all at once.”

Emigholz said a payroll tax increase is worse than other taxes because it depends on jobs.

“Even worse is the fact that this payroll tax increase would most penalize struggling employers who had layoffs that were beyond their control during the pandemic,” Emigholz said. “Businesses are already down, already facing new taxes and already burdened by new regulations, and this payroll tax increase on top of all of that would further devastate our job creators.”

The Senate Labor Committee passed an identical bill last week.

“We cannot afford to let these struggling business owners be further penalized by a rise in Unemployment Insurance costs when they had no other practical recourse to save their businesses,” said Senate President Steve Sweeney, who co-sponsored the bill with Senate Labor Committee Chairman Fred Madden. “This is something we urgently need to address to prevent further economic damage to our business owners and our communities as a whole.”

The bill passed the Assembly Labor Committee by a vote of 9-0 and goes to Speaker Craig Coughlin for consideration.

The committee also approved a bill that would make New Jersey residents eligible for unemployment the day they lose their job.

Current regulations begin benefits for claimants the Sunday before they file the claim.

“In these difficult times, we must treat one another with flexibility and understanding,” said the bill’s sponsors, Assembly Democrats Gordon Johnson, D-Bergen, Valerie Vainieri Huttle, D-Bergen, and Daniel Benson, D-Mercer, Middlesex, in a joint statement. “This legislation will provide ample time for individuals seeking unemployment benefits after February 1, 2021 to file claims and receive benefits that accurately reflect when they lost their job. Most importantly, it will help people get back on their feet as they search for new employment.”