NJ lawmakers advance tax breaks, $100M aid for small businesses
A legislative panel Monday endorsed a 10-bill package helping small businesses recover from the pandemic, including $100 million in federal funding and a variety of additional tax breaks.
There wasn’t an estimate provided for how much revenue the state would forego if it approved the tax breaks, which include a corporation business tax credit equal to 1% of a company’s bill for work that is subcontracted to New Jersey small businesses, defined as those with fewer than 50 employees.
“Our belief is that any lost corporate business tax revenue would return to the state and the municipalities through revenue generated by new or additional work for our small businesses,” said Assemblyman Gary Schaer, D-Passaic. “Reports estimate that without immediate financial support, economic recovery for small businesses may be delayed until 2023.”
Denise Blasevick, co-founder and chief executive officer of The S3 Agency, a public relations and advertising firm in Boonton, said the tax credit would help corporations, small businesses and the communities whose residents remain employed and financially secure.
“With each passing day that we don’t have a path for sustainable recovery for our small businesses, we risk losing more of those small businesses,” Blasevick said.
Other proposed tax changes:
- Temporary sales tax exemption for winterizing small business operations, retroactive to last September;
- Corporate and income tax credits for nonresidential building upgrades such as for disinfecting lighting, infrared thermometers and ventilation;
- Letting restaurants accelerate the depreciation of up to $150,000 in capital spending to comply with COVID-19 health rules, including heaters and overhangs.
Assemblyman Roy Freiman, D-Somerset, said restaurants “are creative, they’re resilient, but they also need help.” The change would mirror recent federal tax law, he said.
“This would basically bring New Jersey’s tax law and say: You know, small businesses, we’re going to allow you to accelerate this so you can take this depreciation immediately, which basically allows them to recover this cost faster because they deserve to,” Frieman said.
Here’s the full package of bills:
- A4634 Allows corporation business tax credit for subcontracting work to New Jersey small businesses.
- A4918 Allows corporations to hold remote shareholder meetings. This was allowed on an emergency basis early in the pandemic, and the current proposal would make it permanent.
- A4958 Provides temporary exemption under sales and use tax for winterizing certain small business operations.
- A5218 Allows certain restaurant owners to accelerate depreciation of certain expenditures under /corporation business and gross income taxes.
- A5389/S3305 Allows gross income tax credit for nonresidential building improvement expenses to reduce spread of COVID-19. This was already approved by the Senate but got expanded Monday so would need to return there for another vote.
- A5443 Appropriates $25 million in federal funds to EDA to support microbusinesses in need.
- A5444 Appropriates $35 million in federal funds to EDA to support food and beverage establishments in need.
- A5445 Appropriates $10 million in federal funds to EDA to support child care centers in need.
- A5446 Appropriates $15 million in federal funds to EDA to support businesses and nonprofits in need.
- A5447 Appropriates $15 million in federal funds to EDA to support arts and culture organizations in need.
Business groups lauded the package and said they hope the Senate takes it up soon.
“This is exactly what we called for,” said Michael Egenton, executive vice president of government affairs for the New Jersey Chamber of Commerce. “This rebuilding process is going to take some time, but you're starting to put together some initiatives that will help out our small business Main Street members.”
Christopher Emigholz, vice president of government affairs for the New Jersey Business and Industry Association, said the state Economic Development Authority “has done a fantastic job” and now will be able to do more.
“The only issue that I would have with anything the EDA has done is they haven’t been given enough money,” Emigholz said. “And so with knowing federal money is coming in – we’re hearing today is going to be about $6 billion, the governor said at his press conference – to the state, we know we can afford this. We could probably afford more.”
Anthony Pizzutillo, government affairs consultant for the New Jersey chapter of the National Association of Industrial and Office Properties, said the bill providing tax credits for nonresidential building work will help because the occupancy rate of office buildings in the state remains around 10% to 15%.
“We need to get our people back to work in our employment centers so that we can then again be productive and get our economy running again,” Pizzutillo said.