New Jersey Budget

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NJCPA Responds to Governor Murphy’s Proposed FY 2019 Budget

 – March 14, 2018
NJCPA Responds to Governor Murphy’s Proposed FY 2019 Budget

Statement by Ralph Albert Thomas, CEO and Executive Director

The New Jersey Society of Certified Public Accountants (NJCPA) applauds Governor Phil Murphy for developing a comprehensive budget plan that promotes critical priorities including education, mass transit, workforce development, and public health and safety. The NJCPA also commends the administration’s efforts to alleviate the tax burden on our citizens by increasing the property tax deduction to $15,000.

The NJCPA has long advocated for policies that will generate economic growth and supported a fair tax system that enables companies and individuals to thrive. We are concerned that the increased spending and revenue raisers in the Governor’s budget will have far-reaching consequences, affecting New Jersey’s ability to grow and attract business.

Our members serve tens of thousands of businesses and individuals. They are on the front lines of the state’s economy, in the trenches with the people who make the thousands of decisions every day, big and small, that shape New Jersey’s economic climate. Our members are, by and large, practical and realistic. They know that the state can’t tax its way to prosperity.

A millionaires’ tax directly impacts small businesses that flow their income taxes through personal returns. We already have some of the highest personal income and business taxes in the nation, and our rates compare unfavorably with neighboring states. The proposed marginal tax rate of 10.75 percent on income above $1 million would put New Jersey well above New York State’s rate (8.82 percent) and be more than three times Pennsylvania’s flat rate (3.07 percent).

NJCPA members already hear objections about New Jersey’s high taxes from clients who are looking to leave New Jersey. In a member survey, 75 percent said they have recommended to some clients that they move out of state. In short, the proposed budget plan will be counterproductive.

Additionally, while we appreciate the Governor’s efforts to help working families, we believe increasing the minimum wage to $15 and imposing another mandate on businesses will have a particularly negative impact on small businesses throughout the state.

We need to work together to provide an environment that not only fosters growth but adapts quickly to changing business needs.

We commend the Governor’s efforts to grow the state’s economy and stand ready to be a resource to his administration.


Watch as NJCPA's Jeff Kaszerman and Ralph Albert Thomas discuss New Jersey's fiscal year 2019 budget — tax increases, how we got here and what happens now:

 

Governor Murphy Signs New Jersey Budget

 – July 2, 2018
Governor Murphy Signs New Jersey Budget

Late in the evening of July 1, Governor Murphy signed the fiscal year 2019 budget after long negotiations with state legislators.

Because the budget was passed at the eleventh hour, much of it has not been assembled into readable form and experts are still deciphering some of the details, many of them important. Nonetheless, many of the main points are clear in outline form, which are listed below. The NJCPA will report more on the budget’s details, particularly the changes in tax law, as they become available.

Highlights of the budget:

  • An increase in the income tax rate to 10.75 percent for taxpayers with income of $5 million and above
  • Significant corporate business tax changes, including:
    • A surcharge of 2.5 percent for the next two years (tax years beginning on or after Jan. 1, 2018, through Dec. 21, 2019) and 1.5 percent for the subsequent two years (tax years beginning on or after Jan.1, 2020, through Dec. 31, 2021) for corporations with income of $1 million or more
    • A new combined reporting system
    • A change in the dividends-received deduction for tax years beginning after Dec. 31, 2016. There’s a reduction in the amount of the exclusion from 100 percent to 95 percent for 80-percent-owned subsidiaries.
  • Authorization for the New Jersey Division of Taxation to hold a 90-day tax amnesty program that begins this year and ends by Jan. 15, 2019. Eligible returns include those that were due on or after Feb. 1, 2009, and prior to Sept. 1, 2017. 
  • An increase in the state property tax deduction cap from $10,000 to $15,000
  • More funding for the Homestead property tax relief program
  • An increase in the Earned Income Tax Credit (EITC)
  • A new Child and Dependent Care Tax Credit
  • No increase in the sales tax rate, however short-term housing rentals (e.g. Airbnb) will now be subject to sales tax. Plus the state will see more sales-tax revenue thanks to a recent U.S. Supreme Court decision that will allow New Jersey and other states to more aggressively tax online sales.
  • A new surcharge on Uber and Lyft rides
  • A new tax on e-cigarettes and tobacco
  • More funding for NJ Transit
  • Modifications to the school funding formula
  • Funding for free community college for lower-income residents

As more information becomes available, we will provide updates at njcpa.org/njbudget.