CPAs More Optimistic About National Economy Than New Jersey’s

BY AIYSHA (AJ) JOHNSON, MA, IOM, NJCPA CEO AND EXECUTIVE DIRECTOR

The NJCPA’s latest economic survey of our members in June revealed a relatively guarded stance on New Jersey’s economy and a somewhat more positive take on the national economy. In our annual survey of more than 500 CPAs, an equal number of respondents (43%) expected New Jersey’s economy to stay the same over the second half of 2024 as expected it to become worse, while when asked about the national economy, nearly 50% anticipated economic conditions to remain about the same and 36% expected it to be worse. In general, most respondents (74%) suggested that lessening burdensome regulations would help improve the business environment, followed by lowering interest rates (56%) and reducing the corporate tax rate (43%). These insights are a telling sign that our state and national economic conditions need to improve. We want businesses moving into New Jersey, bringing offices and jobs here, and that means helping businesses remain competitive and grow to their potential. Our member CPAs, well-versed in how businesses operate, are strategic advisors and willing to be a resource to the New Jersey Legislature when considering the impact of regulations on businesses.

As one respondent noted, New Jersey should be “more business-centric” and state government should look for ways to invest in the business community with grant programs or the use of a surplus to fund the Unemployment Insurance Trust Fund.

Respondents were extremely concerned with inflation (57%), followed by political disfunction in Trenton (53%) and, like last year, finding the right employees (47%) to hire. They echoed concerns that many businesses are facing in the state, such as corporate vacancy rates and the high cost of medical and other insurance rates. Overall, nearly 80% of respondents believed the fiscal health of New Jersey was either fair (44%) or poor (34%) compared with 19% saying it was good and 3% considering it excellent.

Corporate Transit Fee

Governor Murphy’s corporate transit fee (CTF) was a particular sticking point. More than 65% of respondents noted they were either “very concerned” or “somewhat concerned” about the CTF. They believed that the fee would hurt their clients, even though the fee will only directly tax the 600 largest companies in the state. The NJCPA has expressed its disappointment with this fee.

Questioning Relocation

The survey also revealed that some CPAs and their clients are thinking twice about staying in New Jersey due to the state’s high cost of living. When asked whether they had ever advised an individual client living in New Jersey to consider relocation, 63% said they had compared with 37% who had not. More than 50% advised a New Jersey-based business client to consider relocation due to the high cost of doing business.

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Additionally, 59% saw an increase in the number of high-income clients who file as non-residents of New Jersey, compared with 23% who had not. Similarly, 65% said they saw a decrease in the number of high-income clients who have residency in New Jersey currently. According to one comment, “increasing taxes on a shrinking tax base is unsustainable and disastrous for the state.”