NJ State Director Laurie Ehlbeck's has op-ed ran in the Asbury Park Press on May 1.
This guest editorial by NFIB’s New Jersey State Director, Laurie Ehlbeck, ran in the Asbury Park Press on May 1:
Millionaires Tax Would Hurt Middle-Income Small Business Owners
We heard chants calling for a “millionaire’s tax” at a recent union rally of state employees, as legislative leaders and Governor Phil Murphy continue to spar over the direction of the state budget. Such a tax is a horrible idea that will take New Jersey in entirely the wrong direction. Let’s start with the fact that the name, “millionaire’s tax”, is a misnomer because it will hurt the state’s small business owners who are not millionaires.
Unlike larger C-corps, most small businesses are set up as LLCs, Sole Proprietorships, Partnerships, and S-Corps, so instead, they file their business taxes on personal income tax returns. That could throw many small business owners, who are middle-income earners, into the millionaire category. While the Governor claims the tax is “fair” the exact opposite is true when it comes to these entrepreneurs, who work very hard, create jobs, and bring vitality to communities all over the state.
A millionaire’s tax would create an additional consequence for small business owners when, after working hard for decades, they decide to retire and sell their business. The proceeds are often used as their retirement nest egg. But with a millionaire’s tax, that one-time income would be taxed at a much higher rate, taking away a big chunk of the money they hoped to live on in their golden years.
The damage caused by millionaire’s tax would be far-reaching. It would further cement New Jersey’s status as one of the highest tax states in the nation. Anyone thinking of starting a company, larger firms, and those who’ve worked to build wealth, will give that significant weight when deciding where to operate, live, or retire. Why work hard, create jobs, and contribute to the economy, when that behavior carries penalties in one state but offers benefits in another? If businesses do opt for greener pastures, job seekers will follow and take even more tax revenue with them.
It’s time for policymakers to make the tough decisions it will take to make the state fiscally stronger. Stop raising taxes, reduce spending, stop creating roadblocks for small businesses, and make the state more attractive to all companies.
A good first step is to address the looming state pension crisis. Without fiscal certainty, businesses are not likely to grow because they see much higher taxes on the horizon. Senate President Steve Sweeney deserves credit for trying to address the pension problem, and we commend him for it. We appreciate that both he and House Speaker Craig Coughlin have said they don’t favor raising taxes. Now if only Governor Murphy would see the light.
