BUSINESS & ECONOMY

Business Report Plus: New Jersey stands strong on SALT workaround

BY Rhonda Schaffler, Correspondent |
  • State threatens lawsuit if IRS chooses not to allow New Jersey’s SALT workaround
  • Assembly Committee advances bill limiting sick leave payouts to $7,500
  • Murphy signs nuclear subsidy bill, which will lead to increased electric bills
  • State officials expect a stellar tourism season in New Jersey this year
  • Gas prices are at their highest level since 2014

Could New Jersey be headed to court over the federal law limiting state and local tax deductions? It’s a distinct possibility after some developments this week. The IRS warned that it would be issuing new regulations regarding the workarounds states have been doing now that SALT deductions are capped at $10,000.

Gov. Phil Murphy recently signed into law a bill that would provide tax credits for charitable contributions to local governments as a way to circumvent the cap. In a letter to IRS Commissioner David J. Kautter, Attorney General Gurbir Grewal said the tax credit law is similar to 100 laws enacted in more than 30 other states, and is consistent with longstanding IRS guidance and numerous court decisions that such contributions remain deductible. In his letter, Grewal concluded that, “… should the IRS and Treasury Department continue down this path, New Jersey will have no choice but to challenge the new rule in court.”

What happens to state taxes in New Jersey remains unclear as budget talks continue in Trenton. This week Leah Mishkin reported on a difference of opinion on how the numbers would add up should the state impose a tax on millionaires.

One of the many bills considered in Trenton this week is one that targets sick time payouts for New Jersey’s state workers. An Assembly Committee advanced a bill that would cap sick leave payouts at $7,500. Under current law, New Jersey currently caps sick leave payouts for all state workers at $15,000. According to NJ Spotlight, local governments are on the hook for about $1.9 billion in unused sick time for their workers.

Many New Jersey residents could be faced with higher electric bills now that Murphy signed a bill that provides a potential $300 million a year subsidy for PSEG’s nuclear plants. The law remains controversial, with the New Jersey Business and Industry Association saying it adds to the already high cost of doing business in the state.

Many businesses and workers take a well deserved break over the long Memorial Day holiday weekend, but for those in the tourism industry, this is the big kick-off to the season, especially down the shore. State officials have already released projections about a stellar tourism season this year.

Another sign of summer approaching is rising gas prices at the pump. You’re not imagining it, gas prices do tend to move higher during vacation season, and gas prices are currently at their highest level since 2014. On Friday, Sen. Bob Menendez held a news conference to outline his plan to stabilize prices, which included a dig at ‘Big Oil’. As David Cruz reported, Menendez criticized the industry for receiving a corporate tax cut and using the money to buy back stock, rather than pass savings onto consumers.

Ironically, as Menendez was holding his news conference, oil prices tumbled more than four percent on world markets. That’s a big decline for a single day, and it came as some world energy ministers said they could start easing oil production limits that were put in place last year. Those production limits were responsible for driving gas prices higher over the past few months. An analyst with the energy data company Gas Buddy said the disruption in the oil markets could lead to gas prices falling as early as next week.

Finally, New Jersey’s small businesses are on track to receive a record amount of Small Business Association loans this year. The SBA has approved $900 million in loans during the first six months of the fiscal year.