Business urges action to dodge NJ payroll tax hike

Business groups are urging New Jersey officials to take action to avoid a huge increase in payroll taxes and a cut in benefits to keep New Jersey’s unemployment insurance fund solvent.

Business groups are urging New Jersey officials to take action to avoid a huge increase in payroll taxes and a cut in benefits to keep New Jersey’s unemployment insurance fund solvent. [audio:100318PGUI.mp3]

The state fund is out of money and an automatic payroll tax amounting to an average $400 per employee is set to take effect July 1.

Laurie Ehlbeck, the New Jersey director of the National Federation of Independent Business, says small businesses would be especially hard hit by that kind of an increase.

Ehlbeck:Small business accounts for more than 90% of all business in this state. They’re struggling. A sudden increase in the payroll tax could be devastating. It could be the last straw for a lot of these vulnerable businesses.

Democratic lawmakers have introduced a measure to raise the tax by an average $148 for the next year and to evaluate whether another increase is needed.

They say their proposal would avoid a $50 per week reduction in the maximum unemployment benefit that Governor Chris Christie has proposed as part of his plan to fund the system.