New Jersey CPAs criticize state budget
More than 75 percent of CPAs in New Jersey say the Garden State’s recently enacted budget would have a negative impact on the economy, according to a new survey by the New Jersey Society of CPAs.
The NJCPA polled 921 CPAs for the survey and found that 39 percent predicted the state economy could get “marginally worse” under the 2019 state budget signed into law by Governor Phil Murphy on July 1, while 37 percent predicted it would get “significantly worse.” Another 14 percent felt the new budget would have no impact, while 10 percent believe the economy would get “marginally better” or “significantly better.”
New Jersey’s $37.4 billion spending plan raises taxes on large corporations and wealthy individuals (see Murphy signs N.J. budget after last-minute tax deal averts shutdown). Under the new budget, taxes would increase from 8.97 to 10.75 percent on taxpayers earning more than $5 million. The budget also included some notable corporate business tax changes, including a surcharge of 2.5 percent for the next two years and 1.5 percent for the subsequent two years for corporations with income of $1 million or more, along with a new combined reporting system. No change was made to the sales tax rate, although a tax will be levied on e-cigarettes and short-term lodgings, such as Airbnb.
The CPAs polled by the NJCPA pointed to several reasons why the budget plan won’t help New Jersey’s economy over the long term. Some respondents believe that taxing millionaires could lead to more residents in high-income brackets leaving the state. One CPA lamented, “The outward migration of wealth will continue, and the long-term effect will be disastrous.”
Some survey respondents worry that increasing taxes on corporations will discourage hiring as well as incentives to remain in New Jersey, while make the state less friendly to investors and businesses.
Those who favor the budget plan supported Murphy’s decisions to leave the sales tax unchanged, offer more support for transportation and increase the state property tax deduction cap for homeowners from $10,000 to $15,000. The budget also calls for additional money to aid public schools, property tax relief and funding for NJ Transit, along with a 90-day tax amnesty program that’s expected to raise $200 million.
NJCPA often surveys its members about important economic and legislative developments in New Jersey. “Our polls lead to action in more ways than one,” said NJCPA CEO and executive director Ralph Albert Thomas in a statement. “We use them as important sources of information to present to New Jersey legislators and to our own board.”