Leave NJ? Majority of CPAs say you and your business should
Even with its sky-high cost of living, plenty of people have made a choice to dig in and keep their families or businesses in New Jersey.
But the state is still plagued by an outmigration problem, whether talking about businesses, college graduates, or something else, and an increasing number of New Jerseyans are now actually being professionally advised to leave.
More than half (53%) of the 440 certified public accountants surveyed by the New Jersey Society of CPAs in May, in partnership with Provident Bank, admitted they told a business client to relocate because of the state's unfriendly business climate.
What's more, 7 in 10 said they advised an individual client to move out of state due to New Jersey's high cost of living.
Both property and corporate tax rates are to blame, according to Ralph Albert Thomas, NJCPA executive director.
"It's things like that that people are stepping back and taking a look at and saying, 'Do I really need to be in New Jersey?' And they will ask their CPA that," Thomas said.
COVID-19 and the economic shutdown it caused didn't help matters, considering that small businesses are the "cornerstone" of New Jersey's economy, as Thomas puts it.
These businesses need more incentives from the state, Thomas said, in order to not only survive for the moment, but have staying power.
"Get the business economy opened up, to not make it so difficult for individuals, from a business perspective, to open shop here," he said.
Still, because so many businesses these days have no brick-and-mortar footprint, it's easier than ever for them to operate outside the Garden State.
"You can, with the use of technology, serve a client that's here in New Jersey, but from another state," Thomas said.
New Jersey has a lot of good things going for it, Thomas said, but it is not a piggyback state — meaning when you file your tax returns, you can't carry over itemized deductions or even charitable contributions you claim at the federal level.
Plus, the cap on SALT deductions put in place by the Trump administration in 2017 may have had the unintended effect of adversely affecting a large number of middle-class homeowners in New Jersey.
That is why more CPAs believe New Jersey will be worse off economically at the end of 2021 than it is now (37%), compared to how they feel about that same question on a national scale (30%).
"It's over the top, I guess, is the best way to describe it," Thomas said.
NJCPA was very vocal about working with the state legislature to adjust the estate tax, according to Thomas, and would like to do something similar about inheritance taxes.
The group may conduct a follow-up survey in the fall, after the fiscal 2022 budget goes into effect, to take CPAs' temperatures as to whether the tax climate has changed.