New Jersey's Unemployment Crisis Could Cause Major Tax Hike for NJ Businesses

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New Jersey businesses are facing a $1 billion tax hike if no action is taken to shore up the state's unemployment fund, which has been depleted by years of raids and the soaring job losses of the recession. The Department of Labor assesses the unemployment fund balance every March 31st to determine its health and viability. That review showed a seriously deficient financial situation that would trigger a statutorily mandated unemployment tax increase to the maximum level allowed under law. To the average employer, this would represent an annual increase in unemployment costs in excess of 50% or approximately $400 per employee beginning July 1, 2010.

Gov. Christie has presented his plan to decrease New Jersey unemployment benefits and soften the $1 billion tax hike on businesses. The plan would provide for the following:

- Cut maximum unemployment benefits from $600 per week to $550

- Require people who lose their jobs to wait a week before receiving unemployment benefits

- Require anyone dismissed for misconduct to get another job before they become eligible for unemployment benefits

- Eliminate "extended benefits" unless the federal government pays the entire tab

The changes under Christie's plan would spare businesses $700 million in tax increases (the taxes are set by law, and rise and fall with the value of the state's unemployment fund). Under Christie's plan, businesses would pay about $300 million more in the next fiscal year. For businesses, the average tax increase would be $130 per employee, instead of $400 per employee.

To learn more about how this may affect you and your organization, please contact us at info@wiss.com.