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New Jersey’s Estate & Inheritance Tax Double Whammy

New Jersey’s Estate & Inheritance Tax Double Whammy

[Steve Adubato] Hi, I’m Steve Adubato, it’s my pleasure to introduce once again by popular demand we have Michele
Siekerka, president of New Jersey Business & Industry
Association. How’re you doing? [Michele Siekerka] I’m doing great, Steve. Thank you. [Steve] Ready to talk business? [Michele] Absolutely. [Steve] Let’s talk about a whole bunch of issues, key issues
affecting not just the business community because if it affects the business community, it effects all of
us, right? [Michele] That is true. [Steve] There’s one issue that you and
your organization have talked about that, I don’t care who you are in the state, but sooner
or later we’re all going to die. [Michele] Yes. [Steve] Yeah let’s start off with a great topic. We
have what is called an estate tax and an inheritance tax. One of only two states that have both. (Maryland is the other state.) What are they
and why are they so critically important? [Michele] Well, they’re important to business because
when businesses do succession planning– Well, let’s take a step
back, think about– [Steve] What are they? [Michele] Well think about New Jersey business,
okay? New Jersey business, on the whole, small business: generational. Many, many times you meet
people who are third and fourth generation business in the state of New
Jersey. When business folks do their succession
planning, now they have to stop and think about estate and inheritance tax. Estate tax, obviously when you are
inheriting, so think about you’re inheriting your family business, you’re going to get taxed. Estate tax is when you die your estate gets taxed so
it’s a double whammy we are an outlier in that we have dual death taxes in the state
of New Jersey. [Steve] Backup. [Michele] Sure. [Steve] Dual death taxes? [Michele] Two hits. Your estate gets hit and the
person who is inheriting gets hit so– [Steve] What do we want to do away with? [Michele] Well, we’d like to see– we’d like to see them
both go, but– [Steve] Not gonna happen. [Michele] No, not gonna happen, but for starters
you know let’s take one and let’s start a phase in. You know, let’s take the estate tax and lets
start phasing in relief on estate tax. Every year we hear more and more and, Steve, you
hear it every day: individuals saying, in their retirement, I’m getting
ready to leave the state of New Jersey– [Steve] So they don’t have to pay one of the taxes or both. [Michele] Correct. [Steve] Real quick, devil’s advocate; Assembly
Speaker Vincent Prieto said to us on our sister program with Rafael Pi Roman, my
colleague, he said great idea here’s the problem the revenue that comes from that tax,
three, four hundred million dollars, in fact he also said it at the New Jersey Business
& Industry Association Forum, he said that’s revenue the state needs to
close the budget gap great idea, but the problem is if we do
away with that tax, we don’t get that revenue. You say? [Michele] I say let’s look back over the last
decade and let’s look at the income that we’ve
lost and why we have a gap. Okay, so let’s talk some statistics.
Between 2000 and 2010, 15 billion dollars of taxable income left
the state of New Jersey. [Steve] What do you mean, left the state? People left? [Michele] Yes, and when a person leaves us let’s
take a businessman who leaves the state of New Jersey, businesswoman, what does she take with
her? She takes with her her business income and her personal income that we now can’t tax, that leaves the general fund coffers. 44
percent of business is responsible for property tax in the state
of New Jersey. They’re not paying that property tax anymore that’s out of the general fund, that’s
out of the coffers. Their spending power, think about a businessperson who grew
their affluence through their business in the state of New Jersey, they’re not spending that money in the
state of New Jersey. And what about the employees that they’re leaving behind
when they take the business somewhere else? So I understand a gap of $400 million
today, but, you know what, we wouldn’t have that
gap if we stopped people leaving the state over the last decade. [Steve] Real quick, a
couple things, why are you against paid sick leave? [Michele] Paid
sick leave is yet another mandate on business that
makes us uncompetitive as a state and drives up the cost of
doing business. So this isn’t about, you know, everybody
wants to say I don’t want someone sneezing on my pizza. We get that. 70 percent of New
Jersey businesses provide paid sick leave for their
employees. 70 percent. [Steve] But what but Michele, respectively, what about the ones who don’t
and then you have those people coming to work who aren’t well and they get other
people sick. You don’t want that. I don’t want that. So why not have the
government mandate that you can’t do it? [Michele] How about paradigm shift? How about that we
incentivize good business practices? It’s about competition, Steve, right? We
provide good welfare programs for employees because it’s what makes us competitive
as a company that means when we’re competitive as a company, we drive sales, we drive profits we’re successful, OK? [Steve] Don’t have the government-mandate it?
[Michele] No. Have the government reward best practices because those who don’t
provide it they’re not going to get a workforce
because the workforce is gonna be driven to the companies that have the program’s, OK? Eventually, they’re either going to go
out of business or, you know what? How about we go after the guys who don’t have it, but go after them what we do in the state of New Jersey is we legislate to the exception to the rule and we bring all the good guys along with us. [Steve] Alright, real quick on this, I was getting ready for the interview today, look at this,
it happens to be I guess– is this The Record or The Ledger? Oh, The Ledger. Star Ledger: Wage growth in New Jersey continues to
be problematic. You ready for this? Wages, even for those who
get jobs, right? wages not going up because? [Michele] Well we, we–
okay another mandate though. We just put in a new minimum wage mandate in the state that’s
going to go up every year with COLA. [Steve] That’s a good thing. [Michele] No, it’s another mandate on business.
You know, every time we put a mandate on business we drive up costs because with
every mandate comes paperwork, the need to report, and you know what?
You know, the Governor talks all the time about how he’s done a great
job, Governor Christie, about bringing down the size of
government I got to tell you there aren’t people in government
who can enforce all these mandates that want to be put on business so we put in mandates that drive up costs,
drive up paperwork, we have to change all of our programs, our policies, our
back-office, our data, how we report things and we’re reporting to people who, you
know, oftentimes aren’t going to have the opportunity to come out and– and enforce these things either. So, on
the wage side, you know, I understand what this article
may be saying, but let me tell you, we just created 12,000 new jobs in New Jersey
in January. 12,000 new jobs. We’re coming
off of two years of positive economic growth in the state of New Jersey– [Steve] But we’re not where you want us to be, Michele, neither is– and the Governor says– we’re lagging behind the country in terms of job creation because? [Michele] Well
because we’ve had a rough couple of years in New Jersey now I think the good news is we are on
the upward trajectory. [Steve] You really believe that? [Michele] I absolutely do. We just came off of two years
of slow and steady increase sales, profits, and– and– and jobs, okay?
Albeit slow and steady. Okay? Now, we’re coming in to 2015,
businesses tell us that they are cautiously optimistic for another good
year. They are ready to reach in their pocket and invest and spend money, they’re just
looking for positive economic signals from our policymakers. Governor’s given them that in his– in his
Budget Address. Governor said, Governor Christie, no new taxes. [Steve] What of the
millionaire’s tax? Real quick, before I let you out of here. Millionaire’s tax,
Senate President Steve Sweeney in our series, again on Capitol Report with Legislative
Leaders, he said we need this millionaire’s tax. Tax the
millionaires. Only on income, not the first million, but
after that. Bad idea? Good idea? [Michele] Well, who it
impacts, again, is small business. You know, small business will be directly hit
on a millionaires tax. I think in 2015 we have to talk about
what is the definition of a millionaire in the state in New Jersey. You wanna get after the really affluent
people? That– that’s not a millionaire in New Jersey. Think about the the cost of living in the state of New
Jersey. Steve, if you are fortunate enough to own a house in North Jersey, it’s probably half a million bucks. If you’re a smart guy
during your business, and you put away into your 401(k), guess what? You’re a millionaire. You’re probably not living high on the hog and going on big vacations and taking four weeks off and, you know,
riding your jet ski, you’re just doing the right thing. So how do we define a millionaire in 2015
is the place to start. It’s not a million bucks, you’re going to be
impacting small business. [Steve] Michele Siekerka, who is the president of the New Jersey Business &
Industry Association, good stuff thank you so much, Michele. [Michele] Thank you very much, Steve. [Steve] Stay with us, we’ll be right back, right after this. Thank you, Michele.

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