Jersey City

Soon, making ends meet may be much more difficult for Jersey City businesses. That is because Senators Sandra Cunnigham (D-31) and Brian Stack (D-33) put forth a bill (SB-2581) that would allow any municipality with a population over 200,000 to impose a payroll tax.

The only municipalities with populations over 200,000 are Newark, which already implemented a payroll tax and Jersey City. Essentially the New Jersey Legislature is imposing a one percent payroll tax specifically on Jersey City.

Should SB-2581 pass, conducting business in New Jersey would become even more costly. The Tax Foundation rated New Jersey last in the nation in its 2018 State Business Tax Climate Index.

It’s no wonder New Jersey businesses are alarmed at the prospect of yet another burden.

New Jersey Business and Industry Association Vice President Andrew Musick released a statement saying that this additional tax would add to the already high property taxes, new labor mandates and energy mandates passed over the last few months.”

Unsurprisingly, supporters of SB-581 have a different line. Senator Stack, who sponsored the bill, stated that “the tax increase would not have a big impact on employers, but it would have a big impact on our municipality, and the lives of those living and working in the area”.

Senator Stack is certainly correct that a new payroll tax will have a big impact on Jersey City, though not in the way he probably imagines. A payroll tax will create time-consuming paperwork and administrative burdens. Business owners could better spend that time innovating and expanding their businesses.

The added costs will force some business to either shut down or leave the area as doing business in Jersey City becomes unprofitable. Some employers may lay off employees in an attempt to cut costs.

The payroll tax move is even more indefensible, as nearby Newark serves as a testament to the damage it can do.

In a tacit admission that the city’s payroll tax has hurt jobs, the Newark City Council employed a plan that waived the payroll tax for companies hiring local residents. This should serve as a clear warning to not pursue the same policy in Jersey City, but politicians are ignoring reality.