The New Jersey Business & Industry Association welcomes the tax reform amendments that were passed today, bringing us one step closer to beginning the process of comprehensive tax reform.
“In a bipartisan manner, the Senate took the next needed step in moving forward a tax reform package that balances important infrastructure investment with long-awaited relief on the estate tax and the income tax on retirement, two taxes that have been driving residents and businesses out of state,” said NJBIA President & CEO Michele Siekerka.
“This tax reform package includes the elimination of the Estate Tax by January 2018, which NJBIA has long fought for. Family-owned businesses are often made up of assets that have to be sold off to pay a steep estate tax bill, preventing the next generation in the family from continuing to run the business. Further, the current tax threshold of $675,000 is so low that the value of one’s home and 401k can easily trigger the tax in an expensive state like New Jersey. Finally, estate tax relief is not about those who pay the bill today, it’s about those who have left the state to avoid the tax and took their spending power with them,” Siekerka said.
“The package also raises the income tax exclusion on retirement income—a major change that will allow retirees to keep more of their money. These two tax relief measures will make it much easier for residents to remain in New Jersey, instead of relocating to states that either do not have these taxes or have them at a much lower rate—such as our neighboring states of Pennsylvania and New York,” Siekerka said.
“The retirement tax relief will be significant for retirees, many of whom are living on fixed incomes, because the income tax exclusion will be raised from $15,000 to $75,000 for single taxpayers and from $20,000 to $100,000 for married couples,” Siekerka said.
Siekerka cited data that NJBIA has accumulated and researched. In the NJBIA 2016 Business Outlook Survey, two-thirds of business owners responding said that estate and inheritance taxes were taken into consideration when making business decisions and they that would not make New Jersey their domicile in retirement.
NJBIA’s 2016 outmigration study found that more than $18 billion in adjusted gross income left the state during the last decade, which has had a significant impact on the state’s economy. During that same period New Jersey lost $11.4 billion in economic output; $8.4 billion in household spending; 75,000 jobs; and $4 billion in total lost labor income, Siekerka said.
“We commend the senators who voted to amend the bill today to reflect the important tax reform aspects of the compromise agreement reached last week by Gov. Chris Christie, Senate President Steve Sweeney and Assembly Speaker Vincent Prieto,” Siekerka said.
The NJBIA fact sheet “New Jersey’s Estate Tax: Myth vs. Fact” can be read here.