TRENTON – Legislation sponsored by Senator Sandra B. Cunningham and Senator Brian P. Stack that would allow large municipalities to impose an employer payroll tax passed the Senate Budget and Appropriations Committee today.
“The employer payroll tax is a great way to generate revenue which could be used to improve our cities and the resources we offer our residents,” said Senator Cunningham (D-Hudson).
The bill, S-2581, would allow municipalities with populations over 200,000 to impose an employer payroll tax. The tax rate could be changed as long as it does not exceed 1%. If the municipality has a median household income of $55,000 or more, all revenue generated by the tax would be required to go to the school district and be used for school purposes.
“The tax increase would not have a big impact on employers, but it would have a big impact on our municipality, and the lives of those living and working in the area,” said Senator Stack (D-Hudson).
The tax would not apply to public employers. Municipalities would be allowed to create an exemption for wages paid to employees who are residents of the municipality.
Currently, Newark is the only municipality in the state authorized to have an employer payroll tax. No municipality other than Jersey City meets the 200,000 resident threshold as of the 2010 census, but any municipality that does going forward would be able to impose the tax.
The bill cleared committee today by a vote of 8-5 and next heads to the full Senate for further consideration.