Chris Christie’s Tax Cut A Boon For Small Biz, Experts Say [AUDIO]
Governor Chris Christie's plan to cut income taxes by 10% across-the-board over three years is meeting with mixed reviews to say the least.
It would require legislative approval and Democrats who control both houses hate the proposal. The New Jersey Business and Industry Association (NJBIA) predicts it would be a job creator especially when it comes to smaller companies.
NJBIA vice president David Brogan says, "We think it's a very positive thing. If you're an LLC, LLP, sole proprietorship, you're not filing under the corporate business tax. You're filing under your gross income tax so this is a direct benefit to those businesses, those smaller businesses."
Brogan says when you look at statistics you will see, "The small businesses are hiring more and hiring faster than the large companies so they're going to be the driver of the economic engine in New Jersey."
Democrats feel the focus should be squarely on property taxes. They say the average Jersey resident would be lucky to see $100 in savings from the income tax cut plan while millionaires would receive over $7,000.
"The reality is if you pay more in taxes you're going to see a greater benefit from this cut, but as the Governor said and we agree, the old system simply doesn't work and we need to go down a different path," explains Brogan. "The cut will have a dollar-for-dollar impact for the small businesses, but we're also changing the perception for New Jersey and I think that's a big hurdle."
For the better part of the last decade, New Jersey has been considered one of the worst, if not the worst state in the nation in terms of its business climate. In January, the national Tax Foundation ranked New Jersey's business tax climate as the worst among the 50 states (It did not take into account the phase-in of tax reforms enacted in 2011). The state's income tax was rated the third worst in the nation.
According to the NJBIA, there are 184,000 small businesses in New Jersey, an estimated 80 percent of which pay income taxes instead of corporate taxes because they are LLCs, partnerships, S corporations or sole proprietorships. These businesses currently pay the nation's third highest top-income tax rate (8.97 percent), behind only Oregon and Hawaii.
State Senate President Steve Sweeney isn't buying Christie's argument that the tax cut will spur job creation. He says, "He's protected millionaires the entire time he's been here and our unemployment rate is higher than the national average. When I hear this stuff, how 'These are the job creators,' then our unemployment rate should be lower than everyone else's."
Brogan and the NJBIA are certainly not alone in their support for Christie's tax cut plan.
John Galandak, president of the New Jersey Commerce and Industry Association of New Jersey says, "This is another positive step in having New Jersey shed its reputation as one of highest taxed states in the nation. Signals like these make people stand up and take notice of how our state is changing and becoming a more attractive place to locate and grow a business. CIANJ is certain that the creation of private sector jobs will accelerate as a result,"