Commerce and Industry Association of New Jersey

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CIANJ President's Message

"A Taxing Situation"

 

 

by John Galandak, November 2014 COMMERCE Magazine Column

By acting now and eliminating the state’s inheritance tax and its estate tax, New Jersey will instantly become more attractive to entrepreneurs as a place to start and grow a business, creating private sector jobs in the process. The residents who work in these new jobs will contribute to the tax revenue realized by the state, without raising the tax rates on anyone. This is the kind of forward thinking that we need from our elected officials in Trenton, but lawmakers will say: “I’m for the elimination of these taxes, but how will the revenue be replaced to balance the budget?”

The estate tax and inheritance tax produce about $700 million in revenue for Trenton. Clearly, this is a significant number in a budget of about $32 billion. But only two states collect both an estate tax and an inheritance tax: Maryland and New Jersey, and this is not a list we want to be on.

These taxes drain wealth from the economy, hurt job creation and label the Garden State as a high-cost area— or in other words, “take your business and your spending elsewhere.” According to a report from the New Jersey wealth management firm RegentAtlantic Capital, “in 2010 alone, New Jersey lost taxable income of $5.5 billion because residents moved.”

Another study from Boston College’s Center on Wealth and Philanthropy noted that before Governor Chris Christie eliminated and then vetoed New Jersey’s millionaires tax, “approximately $70 billion worth of wealth left the State of New Jersey, as financially well-off individuals and families moved away at a more rapid pace than they were being replaced. The same study showed that the state’s charitable capacity declined by $1.13 billion.”

This is the legacy New Jersey has to overcome and our governor has got the ball rolling, but the next step in bringing New Jersey’s business credibility out of the dark is to eliminate its archaic estate tax and inheritance tax. Other states are already getting the message from employers, investors and economists and are taking appropriate action.

Ohio’s estate tax was repealed effective Jan. 1, 2013. Tennessee’s estate tax will be repealed effective Jan. 1, 2016, and Indiana’s inheritance tax, which was supposed to be phased out by Jan. 1, 2022, has ended up being retroactively repealed to Jan. 1, 2013. This is just a sampling of the wave of smart policy that is sweeping the nation. Shouldn’t New Jersey also be on the right side of this business-friendly revolution?

Detractors are quick to claim this change will only benefit the rich. Quite the contrary; the rich always have more options than those of more modest means. People who are in a position to own two homes are still living in New Jersey much of the year, but spending enough time in another state such as Florida to have it be their official residence—and thereby removing themselves from the death tax liability, and while they are alive, eliminating their obligation to pay personal income tax in New Jersey, thereby reducing the revenue New Jersey receives from that tax. At the same time, their philanthropy— financial support for colleges, hospitals and other institutions—often follows their change in residency.

It’s also a quality-of-life issue. People want to stay in New Jersey to maintain their social circles; see their grandchildren grow and be involved in their lives; keep their doctor and other elements of their support system; and basically enjoy the quality of life that people have in the Garden State.

In my mind, New Jersey must get rid of its inheritance tax and estate tax. The first step is to phase in to an eventual elimination of these taxes by raising the threshold to the federal level. Phasing in the elimination will make the adjustment to lower revenue from this source manageable for our state budget. Other states are already doing the right thing. Now it’s New Jersey’s turn.

To view the complete November issue of COMMERCE Magazine, click here.

87th Annual Luncheon

Click here to view pictures from the 87th Annual Luncheon.

Executives and Officers Series

Please join us for the latest installment of our “Executive and Officers Breakfast Series,” with Governor Thomas Kean.

December 16th, 20148:00 am | Register Now

Business 2 Business Council

Through the Business to Business Council, CIANJ is seeking to provide opportunities for small business owners and entrepreneurs to gain the contacts, knowledge, and information necessary to grow their businesses profitably. The B2B Council events will connect them to opportunities across New Jersey’s diverse business landscape.

CEO Roundtable

The CEO Roundtable provides a forum for chief executive officers or business owners to seek advice and share experiences. Participants freely discuss issues they confront daily, such as compensations, financing, dealing with family members, relocations, sale of a business and many of the topics.

Environmental Business Council

Since its inception, the EBC’s mission has been to recognize the important economic role the environmental industry plays within the state, to demonstrate that environmental issues are also business issues, and to teach the business and regulatory communities that environmental responsibility and economic growth are fundamentally related

Financial Decision Makers Roundtable

CIANJ’s Financial Decision Makers Roundtable is intended for senior executives in key financial positions within their firms, as well as CIANJ members and invited guests. The purpose of this roundtable is to share critical information related to financial decision making and to allow attendees to develop professional relationships with each other. CPE credits are offered.

Generation Now: A Young Professionals Or

Generation Now is a group of young professionals in alliance with one another for the purpose of education, networking and peer-to-peer exchange leading to personal and professional growth.

Healthcare Roundtable

CIANJ’s Healthcare Roundtable is a forum for professionals who work within a spectrum of related disciplines to interact with one another by discussing critical issues that affect healthcare, as well as to facilitate the exchange of knowledge and develop relationships that enhance business

Human Resources Council

CIANJ’s Human Resource Roundtable is intended to advocate HR awareness by providing information and resources in various HR disciplines. It educates those responsible for HR in their organizations by sharing knowledge to solve common challenges. As an HRCI Approved Provider, attendees can earn continuing education credits toward PHR, SPHR, and GPHR

Legislative Roundtable

The mission of the Legislative Roundtable is to provide a forum where business executives can meet with state and federal lawmakers to discuss the latest issues affecting commerce.

Manufacturing Roundtable

The Manufacturing Roundtable is intended to be a forum for professionals who work in complimentary disciplines to discuss critical issues that affect manufacturing, facilitate the exchange of knowledge, and to develop relationships that enhance business

Real Property Roundtable

CIANJ’s Real Property Roundtable is intended to be a forum for professionals who work in complementary disciplines to discuss critical issues that affect real property, facilitate the exchange of knowledge, and to develop relationships that enhance business

Technology For Business Roundtable

The Technology For Business Roundtable is intended to be a forum for professionals who work in complementary disciplines to discuss critical issues that affect technology, facilitate the exchange of knowledge, and to develop relationships that enhance business.

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