From the Star-Ledger, Aug. 8, 2010
Innovation is the mother of progress. Today, before leaving the house, I had already text messaged a daughter at college, paid several bills using my laptop and accessed my daily schedule via BlackBerry — all before programming my GPS to guide me to my first morning meeting. Ten years ago? I would have been at the kitchen table juggling a checkbook and phone, all the while searching for my appointment calendar at the bottom of a briefcase. And that first meeting of the day? I’m sure I would have been late.
Technological advancements surround us and have, for the most part, improved our lives. Yet this innovation is sometimes strangely absent in government, where processes and policies often seem stuck in a time warp, to our detriment.
Take tax policy, for example. Our number one revenue generator is still the property tax, which first appeared in colonial times before its “modernization” in 1851. Today, property ownership is no longer considered a reliable indicator of wealth. Other, more equitable state taxes on income, consumption and production are available. Yet in New Jersey, to the dismay of homeowners everywhere, we continue to rely primarily on the overly burdensome and discriminatory property tax to fund government services.
Business also bears the brunt of another outdated area of law. A generation ago, large corporations sustained our economy. Now it is the small businessmen and women who are the engines of prosperity.
We know that most Americans work for a small business. According to the latest Intuit Small Business Employment Index report, small business owners are already leading the nation out of the Great Recession, growing jobs at a 4 percent annual rate.
One would think, therefore, that New Jersey tax policy would treat small employers as … well … employers, giving them the same incentives to invest and hire in New Jersey as are available to corporations. But that’s not the case.
For example, if you are a New Jersey corporation and you lost money last year due to the recession, our state corporate tax allows you up to 20 years to recoup your losses by lowering future tax payments. This policy encourages companies to weather hard times and maintain employment knowing that once good times return, tax policy will help make them whole.
However, in New Jersey, small employers who are not corporations are prohibited from recouping losses in future tax years. Because most small employers lose money in their struggling early years, this omission is particularly harmful, not only to these local entrepreneurs, but to our workforce looking to them for jobs. The state’s desire for tax money today should not come at the cost of tomorrow’s jobs.
Along with Republican state Sen. Steve Oroho, I have introduced bipartisan tax reform legislation that would end this discriminatory treatment of small employers and put them on par with their larger corporate cousins. Not only would this proposal give small business owners the same ability to recoup their losses, but it would also encourage our entrepreneurs to establish multiple businesses by allowing them to use losses from newer businesses to offset gains from their other, profitable entities. The goal here is to use tax policy to nurture, not discourage, investment, job retention and growth.
Tax policy may be unpleasant, but it doesn’t have to be punitive, especially to our home-grown entrepreneurs. It’s long past time that New Jersey sheds the antiquated tax policies that strangle growth. If I can juggle a blackberry and laptop over breakfast, then New Jersey can certainly modernize its tax code.