To address the weakness in New Jersey’s economy, legislators should take immediate action now to stop the state’s job losses and position our economy for strong job creation in a future economic recovery.
New Jersey has lagged behind the nation in the rate of job growth for several years, indicating that the state’s economic problems go much deeper than a national recession or a crisis in the financial markets. The economic problems facing our state did not manifest themselves over the past few weeks; nor can they be simply written off as the effects of a weak national economy.
What New Jersey needs now is for our state leaders to act swiftly and decisively to stop the job losses we’re facing, and position New Jersey for stronger economic recovery in the future.
While many policy makers have focused on the 14,600 jobs New Jersey has lost in 2008, New Jersey’s private-sector job growth has been dismal since as far back 2002. As the nation created jobs at a rate of nearly 6.5 percent between 2003 and 2007, New Jersey job growth was a paltry 2.2 percent. The crisis in the state’s economy is not a tidal wave from last few weeks, but a steady rising of the flood waters.
To get back on track, legislators need to reform New Jersey’s tax structure so that it does not penalize companies that create jobs. Specifically, legislators should eliminate the tax penalty for basing operations in New Jersey. Under the Corporation Business Tax, a company’s New Jersey tax is based on three factors: New Jersey sales, New Jersey property, and New Jersey payroll. The more New Jersey presence a company has, measured by employment, offices and plants, the higher the New Jersey tax.
Yet for out-of-state companies that simply sell their goods and services in New Jersey but have few, if any, jobs or properties here, these factors go untaxed. So a company could lower its New Jersey CBT by moving its operations and jobs out of state and simply selling its goods here.
This is backwards. At a time when we want to attract and retain jobs, our corporate tax structure is working against us. Seventeen states, including New York, Pennsylvania, Maryland and Massachusetts, have adopted some form of single-sales-factor tax reform so that companies are taxed only on their in-state sales.
Legislators need to exercise more oversight on government bureaucracies and step in when necessary. And the Assembly Labor Committee must review its job training programs with an eye to streamlining requirements so that employees at more small businesses can utilize them.
John Rogers is vice president of human resource issues at the New Jersey Business and Industry Association, a Trenton-based lobby group for employers. He serves as the association’s point man on labor/management issues including wage and hour compliance, workers’ compensation, unemployment insurance, and family leave issues. He also handles election law and campaign finance issues and serves as deputy director of NJBIA’s Manufacturing Council.
Rogers previously was chief council for the New Jersey General Assembly Republican Office, responsible for supervising legal operations. He has a bachelor’s in political science from Syracuse and a JD from Seton Hall.