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How to Retain and Attract Businesses to New Jersey

by: ANTHONY RUSSO, PRESIDENT, CIANJ

NEW JERSEY has a lot going for it, from an enviable location to a well-developed workforce to a transportation network that con­nects it with many key centers of com­merce. But high taxes, regulatory bur­dens and other issues are hurting the state’s ability to attract and retain busi­nesses. New Jersey needs creative solu­tions and incentives to reach out to companies that—thanks to technology—could break ground anywhere. One challenge we all face is the high cost of doing business, which hurts New Jersey’s competitiveness. New companies need to be nurtured and supported, and that means our state government has to re-think bankrolling its agenda on the backs of businesses. It means enacting business-friendly policies, lowering busi­ness taxes and curtailing excessive envi­ronmental regulations so the companies that are already here don’t leave for lower-cost states.

We need to make it desirable and affordable for the best and brightest graduates of our colleges and universi­ties to stay right here in New Jersey as entrepreneurs, skilled workers and pro­fessional services experts. The next great idea—tomorrow’s “Google”—may be founded elsewhere unless we—as a state—can address the level of business-friendly policy coming out of Trenton and revenue-hungry towns and cities with decision-making powers.

Pro-business decisions are hard-fought battles in New Jersey, from advocating fewer regulations and lower taxes to opposing state budgets that include irre­sponsible spending. Both the state and federal governments have spending problems, and until these are addressed without overtaxing businesses, the hunger for more tax money will bring about more, bad decisions.

COMMERCE asked experts in account­ing, banking, healthcare, higher educa­tion, law, manufacturing, office services, real estate, technology and wine and spirits how businesses and industries can thrive in the Garden State—essentially seeking a roadmap for retaining and attracting companies to New Jersey. Here are their thoughts, insights and observations about making New Jersey a better place to live and work.

ACCOUNTING

Citrin Cooperman

By Alex Serrano, CPA, NJ Tax Practice Leader

New Jersey businesses that for tax purposes report their income through a flow-through entity (S Corp., partnership LLC, or partnership are in a tough position, since their income is taxed on owners’ personal tax returns. New Jersey’s personal income

tax rates are higher than those of neigh­boring states, maximizing at 8.97 per­cent when taxable income exceeds$500,000. Pennsylvania pays a flat rate (3.07 percent) and New York State’s top rate of 8.82 percent doesn’t kick in until single taxpayers’ taxable income exceeds$1 million ($2 million for joint filers), thus most New Yorkers pay a much lower tax rate. Another obstacle is depreciation rules on capital assets—since New Jersey has decoupled from federal law, new federal depreciation rules don’t benefit New Jersey, and depreciation deductions at the state level may be significantly lower. Overall, to incentivize businesses, state legisla­tors need to reconsider current tax poli­cies. Citrin Cooperman’s focus has always been helping clients navigate the laws in place, and we continue helping busi­ness owners maximize their tax benefits, within an existing framework.

CohnReznick LLP

By Neil Gerard, CPA, Partner and Tax Leader

With regards to New Jersey’s Corporation Business Tax, one proposed change would be in the way in which revenues from services are sourced to the state. Currently, such sales are sourced to New Jersey to the extent the performance of the services are performed in the state. In the last few years, many states have been adopting a market-based sourcing approach for the performance of servic­es. Under these rules, service revenue is sourced to a state based on where the benefit of the service is received or, stated differently, sourced to the state of where the customer is located. Such a change is expected to broaden New Jersey’s corporate tax base while, at the same time, perhaps encouraging out-of-state companies to establish their corpo­rate headquarters in New Jersey. Given the complexity of these issues, we are advising our clients to meet with their tax advisors to discuss issues that may pertain to their specific business. As part of this step, companies will be able to determine ways in which the state and federal tax laws interact to identify criti­cal problems, as well as possible new business opportunities that did not exist prior to the change in federal law.

Goldstein Lieberman & Company LLC

By Phillip E. Goldstein, CPA, Managing Partner

In New Jersey, a business’s legal formation (sole proprietor, LLC, S Corp, corporation, partnership, etc.) makes a huge difference when it comes to tax liability. Clients come to us to structure their companies to maximize their tax savings. We want companies to come to New Jersey and to grow in New Jersey, so here’s our advice: Explore a lower tax rate. New Jersey needs a method to reduce its tax structure on all types of business taxes from corpo­rate to individual, sales and property. Reduce rates and revise New Jersey’s cumbersome individual tax system. The top rate of 8.97 percent is way too high. Provide homeowners with help on their combined property and income tax bills. Allow residents to deduct state property taxes as contributions, and don’t hike the millionaire’s tax, as they are paying more than their fair share already. Work together. Put political differences aside for the good of New Jersey businesses and residents. New Jersey was originally built on two things: proximity to New York City and a low tax structure. New Jersey needs to get back to a low tax structure to compete globally for com­panies to decide to make their homes here in the Garden State.

Grassi & Co. By Michael Hochman,

CPA, CCIFP, Partner-in-Charge, Park Ridge, NJ Office

Since New Jersey doesn’t do as much in business incentives as New York has been doing, part of the solution to making New Jersey a better place to do business would be to further lower the individual tax rate. Since most businesses are flow through entities, they pay individual taxes. Lowering those taxes will have a direct effect on businesses. The corporate rate can also still be reduced. Making cannabis legal will also improve the economy in New Jersey, as it is expected to bring in more than $1 billion a year in revenue. At the end of the day, tax reform is still keyand the proposed millionaire’s tax, on top of the repeal of the SALT deduction, is counterproductive and will only make a bad situation worse.

Klatzkin & Company, LLP

John Blake, CPA, Partner

The state’s biggest weak­ness is the high tax rates on individuals and busi­nesses, according to Blake. “New Jersey should also revisit the incentive and tax credit programs to target industries that are likely to create more jobs.” High taxes in general, and targeted ones like New Jersey’s minimum gross receipts tax—which starts at $500regardless of whether a business shows a profit—“harms startups, which may run a loss in the beginning, and can be burdensome for small businesses in general,” he cautions.

Blake would also like to see education­al institutions work more closely with the state to “keep more college grads here; but I think that also goes back to making housing more affordable and reducing taxes. This is a good state to be in, but the affordability and regulatory challenges turn some people off.”

Levine Jacobs & Co. LLC

By Michael H. Karu, CPA,CFF, Partner, Member of the Firm

New Jersey has always been an expensive state in which to do business. The first change would be to reduce the unemployment tax rate for new employers, thereby encouraging new businesses to hire New Jersey employees. The second would be to provide additional tax incentives for new businesses, especially those in man­ufacturing or those to be located in depressed economic areas throughout New Jersey that would more greatly benefit from new jobs and facilities. Our advice to clients is to “stay the course.” Although the leadership has changed, we don’t have a full grasp on the initiatives and/or increased taxes that will be handed down. We can only hope that the New Jersey Legislature will be more proactive and less reactive.

NJCPA

Ralph Albert Thomas, CEO & Executive Director

New Jersey could take a variety of steps to attract and retain businesses, and encourage entrepreneurs, says Thomas. “High taxes are a recurring issue for individuals and businesses in our surveys and in others,” he says. “Consolidating shared services among towns would be a start. Look at Princeton Township and Princeton Boro—that 2013 consolidation seems to be working well.”

Along with many other business lead­ers, Thomas has some concerns about the state’s plans to hike the minimum wage to $15 an hour. “A large, multi­state company can absorb the additional extra costs, but a smaller company that only does business in New Jersey—and competes with large firms—is at a disad­vantage. The smaller firm has a choice of raising prices and losing its competi­tive edge or laying employees off or reducing hours to cut costs. We saw this in Seattle, which increased its minimum wage only to find that businesses reduced hours for many people.”

Instead of simply raising the minimum wage, Thomas would like to see more support for workforce development “to enhance people’s skills so they can get a better job. Investing in post-secondary education is part of the equation, which would help to keep Millennials and Generation Z here, while attracting more businesses.”

Sax LLP

By Lawrence M. Gradzki, CPA, J.D., LLM, Partner, Director of Business and Tax Services

In the midst of tax reform, Gov. Murphy has his work cut out for him in creating a more enticing business envi­ronment in New Jersey, while also tack­ling our budget deficit. With change, however, comes opportunity and given the dense population of New Jersey, it is important to attract and keep businesses and wealth in our state to allow us to thrive and flourish. Two key factors busi­nesses focus on when deciding where to establish and maintain residency are the ease in which they can conduct business, and the cost of doing so (including tax).It would be prudent of Gov. Murphy and legislators to take a comprehensive look at these issues when considering policy and law changes. Creating and expand­ing tax incentives for both businesses and their owners could make doing business in New Jersey more appealing. In addition, the approvals for starting and expanding a business in the state should be as seamless and streamlined as possible. As a tax and business advisor to our clients, I look at each situation individually to ensure our clients are positioned to take full advantage of new and existing tax incentives, particu­larly the changes enacted for 2018 and future years. This includes planning and structuring the QBI deduction on the federal level and various job-related credits offered by New Jersey.

Sobel & Co., LLC

By Alan D. Sobel, CPA, CGMA, Managing Member

New Jersey’s future suc­cess is predicated on a strong and vibrant economy that encour­ages businesses, large and small, to thrive. Most of us who call New Jersey home are proud of all our state has to offer, but policies need change because they hinder our reputation, making it difficult to compete in the national and global marketplace. Our tax policies need to be modernized and the tax base needs to be broadened. Too many of our taxes are concentrated on the few caus­ing the highest property taxes in the country and one of the highest marginal tax rates. Perceptually this creates a very hard barrier to overcome. We also need to review our regulations such that New Jersey becomes more business friendly, creating the balance of welcoming eco­nomic development and protecting our citizens. Policymakers have to also deal with the realities of New Jersey’s spend­ing and entitlements that are burdening our taxpayers and our children’s genera­tion. I advise clients experiencing debt issues to cut spending and consider sell­ing off surplus assets to create liquidity to pay down the excess debt. New Jersey should evaluate its assets and consider reducing debt by selling off those that are not critical to the purpose of government.

Wilkin & Guttenplan P.C.

Edward I. Guttenplan, CPA,CGMA, MBA, Managing Shareholder

“It’s a complicated question,” says Guttenplan. “One issue is that nearby states are friendlier to smaller businesses, and generally have lower taxes. New Jersey has good tax incentive and credit programs, but they’re mainly aimed at large compa­nies. There are at least 360,000 small businesses here, and we need to do more to encourage them to stay here and hire more people.”

The state should also improve the transportation and other infrastructure, he adds, “especially if we want to attract Millennials, who increasingly embrace mass transit and want to be able to live, play and work without spending a lot of commuting time.”

Guttenplan is concerned about a plan to hike the state’s minimum wage to $15 an hour. “People should make a fair wage, but I’m worried about the possible unintended consequences of a mandated state hike,” he explains.

On a positive note, he sees signs that New Jersey is trying to reduce excess regulations and points out that the state has a lot going for it, including an educated workforce and its proximity to the New York City market. “People are willing to pay a bit more for these advantages, but there’s a limit to how much more.”

WithumSmith+Brown, PC

By Jim Hannan, CPA, Partner, Manufacturing, Distribution and Logistics Group Leader

Let’s start close to home with Trenton. The overtures embedded in the Murphy administration agenda will add costs to businesses based in the Garden State, without any real relief to owners and stakeholders. In addition to a high cor­porate tax rate, our clients, especially those in the manufacturing sector, are saddled with the weight of outdated regulations, fees and red tape that limits their ability to innovate and expand their business. Let’s look at some relief on these regulations and those hidden fees. Finally, our public utilities have some interesting programs designed to spur clients’ energy efficien­cies and expansion plans. Let’s go down Route 95 to DC. Manufacturers will cer­tainly benefit from lower federal tax rates and accelerated write-offs, which provide a real incentive to pull the trig­ger on capital expenditures and stimu­late activity over the whole length of the supply chain. Offsetting that opti­mism is the cloud of a trade war with countries who are essential suppliers to U.S. businesses; certainly, let’s be fair inworking through our differences, but protectionist policies in a global econo­my creates a lot of anxiety. Let’s see how it shakes out, as the markets typically play a big role in solving issues.

BANKING

Atlantic Stewardship Bank

Paul Van Ostenbridge, President and CEO

New Jersey enjoys some competitive advantages, including a dense population, a diverse workforce and easy access to air, rail and sea transportation, according to VanOstenbridge.

He says that the chemical, technology, light manufacturing and other industries that are active in the Garden State gen­erate “a lot of positive energy,” while “Choose New Jersey and other organiza­tions are doing a good job of attracting companies.”

“But more incentives to start a new business or relocate existing ones here could be helpful,” he cautions.

Van Ostenbridge understands why many small businesses are leery about the state administration’s plan to hike the minimum wage to $15, but doesn’t think it will cripple companies.

“When Atlantic Stewardship Bank started about 34 years ago, the mini­mum wage was $3 an hour,” he recalls. “So, a hike now may force businesses to make some changes in the way they operate but, in the long run, they’ll adjust, especially if it helps people achieve a better standard of living.”

SB One Bank

Anthony Labozzetta, President and CEO

“New Jersey has so much potential,” notes Labozzetta. “Its location—close proximity to the high growth New York City and Philadelphia markets—offers significant opportunities; so too does its highly skilled talent pool. New Jersey has a lot of great selling points; however, the premium to operate a business out of New Jersey could be viewed as outweighing the benefits.”

The state needs to rebuild trust with the business community, he adds. “It needs to re-focus on retaining the exist­ing businesses within the state before it can direct its attention to bringing in new business.”

This rebuild hinges on the state’s abili­ty to follow through on some of the initiatives that it has already started, Labozzetta says, including getting the state’s “budgetary house” in order; cre­ating a stable tax environment for busi­nesses and individuals, making it easier for businesses to operate here; and mak­ing investments in infrastructure.

“The Garden State must create a cul­ture of trust in order to attract, retain and encourage entrepreneurship,” he says. “We need to leverage our strengths while incrementally working towards making it financially feasible to operate here.”

Spencer Savings Bank

By Jose B. Guerrero, Chairman, President and CEO

Our recommendation is to set policies that build on the state’s strengths—education and innovation. New Jersey is a global leader in educa­tion, both K-12 and higher ed, and is recognized internationally for its inno­vation not just in its well-known sectors such as the pharmaceutical industry, but also in industries such as defense, med­ical devices and consumer products. The talent pool in New Jersey is strong; nearly 40 percent of New Jersey’s work­force graduates from college with a bachelor’s degree or higher. Policies from Washington are having a mixed effect on New Jersey—while businesses may see the benefits in their bottom line, the employees may take less home due to the new property tax deduction. Our perspective is that policymakers should not exacerbate negative trends in New Jersey and give people a reason to leave. Instead, policies must focus on helping the New Jersey economy strengthen its existing strengths, while also reassuring taxpayers that they are not being pushed out of the state.

Valley National Bank

By Ira Robbins, President and CEO

We believe in lifetime learning, and more can be done at a broader level to improve skills-based training and education to correct troublesome labor market trends. The labor force participation rate in New Jersey peaked near 68 percent in the earlier part of this decade and has since declined to near 62 percent. We think this trend can be reversed through improved skills-based training and edu­cation. Today, the rate of technological change requires smart policy to ensure our workforce maintains relevant  skills necessary to compete. Nationally, there are more than 5 million open jobs, yet the number of unemployed is more than 6.5 million; we think this is largely attributed to a skills gap. Technology will continue to permeate across indus­tries. Natural language processing, machine learning and other key artificial intelligence technologies are reshaping how companies operate and, therefore, the skills demanded of its workforce. Investment in STEM education is a solid start. But for those being displaced today in the labor force because of tech­nology, a more comprehensive effort must be made to retrain workers. It requires a collaborative partnership between policymakers and the private sector to ensure today’s workers remain relevant and the next generation of workers have the skills needed to succeed.

HEALTHCARE

AmeriHealth New Jersey

Mike Munoz, Market President

“The first step is to con­tinue to get the word out about all that New Jersey has to offer residents and businesses,” according to Munoz. “Situated between two major markets in New York City and Philadelphia, New Jersey’s perks are easy to overlook. However, with the state’s wealth of academic institutions, vast infrastructure, and proximity to major cities and international airports, we have what it takes to capture the attention of businesses of all kinds. Additionally, continued investment in programs that make it more affordable to do business in the state is essential.” He notes that AmeriHealth New Jersey “is proud to focus exclusively on the Garden State. In nearly 25 years of busi­ness, we’ve found New Jersey to be an environment rich in community and full of opportunities for both individuals and businesses.”

BioNJ

Debbie Hart, President and CEO

New Jersey has some very attractive benefits to attract research-based life sciences com­panies. At the same time, there are opportunities for improvement, accord­ing to Hart.

“New Jersey has an excellent educa­tional system and has established itself as a biotechnology industry hub, which makes it easier to attract these compa­nies, since they can find talent and col­laborate with other companies. New Jersey also enjoys an excellent geo­graphic location, with access to trans­portation that promotes participation in the global economy. At the same time, we’re concerned about the tax structure and affordability of doing business here.”

She says that businesses compare New Jersey to other states, “and when they weigh taxes, regulation, infrastructure, and transportation, we have to make sure we’re as competitive as possible.”

Citing studies that indicate New Jersey is spending significantly more on incen­tives— on a per-job basis—than other states, Hart supports Gov. Murphy’s review of the local and state programs “to ensure we’re deploying our pro­grams in an effective manner.”

Hart would also like to see New Jersey step up its marketing efforts, noting that “other states are aggressively marketing their benefits, so we need to make sure that our story is a good one, and that it’s getting out there as well.”

Hackensack Meridian Health

Robert C. Garrett, FACHE, Co-CEO

As New Jersey Gov. Phil Murphy advocates, New Jersey must be a leader in the innova­tion economy, says Garrett. “Through investment in research and development and world-class educational institutions, our economy will thrive and grow. By creating an innovation ecosystem, the state will attract new, leading-edge companies, support entrepreneurs, and drive job creation, which is critical to the long-term success of our state.”

Hackensack Meridian Health recently opened the Agile Strategies Lab, an innovation center that it developed with the New Jersey Innovation Institute to bring together experts in healthcare, engineering and technology. “Think of a Shark Tank for healthcare,” Garrett says, “though we call ours Bears’ Den. Our network contributed $25 million to jumpstart the project, which is already attracting entrepreneurs from across the country to come to New Jersey.”

His organization is also collaborating to create a nationally competitive health and medical sciences complex, the Hackensack Meridian School of Medicine at Seton Hall University. “This is the first private medical school to open in New Jersey in more than six decades, and now is the only one in the state,” says Garrett. “This premier institution will attract more businesses, particularly in the life sciences and medical fields, to relocate to New Jersey to benefit from our highly educated workforce.”

HIGHER EDUCATION

Ramapo College of New Jersey

Dr. Peter P. Mercer, President

One of the bedrocks of New Jersey’s ability to attract and retain businesses involves maintaining and strengthening the state’s public higher education system, according to Dr. Mercer. “When Mercedes Benz moved its U.S. headquarters from Montvale to Atlanta, one of the reasons cited was that Atlanta’s quality of education is catching up to New Jersey’s,” he says. “That’s an important observation because companies need talented, edu­cated employees that can compete in today’s highly competitive market.”

Institutions such as Ramapo College are trying to help meet that need by working with businesses to offer co-op and internship programs, he adds. “But this joint effort must also include the government. Public higher education needs more support, and the level of support has been severely constrained during the past few years.”

Dr. Mercer adds that “there’s some­times a tendency to throw money at

businesses to attract them. That may work in the short term, but the partner­ship with educational institutions must include all the players and needs to be reinforced for long-term success. Companies look at the bottom line, but they also consider requirements such as a well-educated workforce. In addition to its proximity to important markets, New Jersey has historically had a talent­ed workforce, and we need to ensure that remains as one of our competitive advantages.”

Rutgers University Edward J. Bloustein School of Planning and Public Policy Dean Emeritus, Professor Dr. James Hughes

“New Jersey has many policies that are supposed to help startups and other busi­nesses, but they should be re-examined to see how well they’re working,” says Dr. Hughes. “Is the state’s business tax structure friendly enough to encourage business formation, and are present tax policies helping or hurting small busi­nesses and startups?”

Reviewing and streamlining the state’s maze of regulations would also be a posi­tive step. “Many individual environmental and other regulations may be necessary, but in total they can be almost incompre­hensible,” he notes. “Instead of bouncing businesses around to multiple agencies, streamline the government operations to reduce time and other waste.”

Dr. Hughes says some programs—such as business incubators supported by the New Jersey Economic Develop-ment Authority—are helpful, but he

would also like to see more public-pri­vate partnerships, perhaps with universi­ties providing workforce training, and loaning out faculty to help startups in return for stock or other compensation.

“Ideally, the state would take a more active role in welcoming all businesses to New Jersey, providing high-level per­sonalized attention,” Dr. Hughes coun­sels. “Southern states like North Carolina do that really well. It’s a matter of establishing an environment that makes entrepreneurs feel they’re wanted and that the state and local governments are on their side. When you have a culturelike that there is a big potential upside.”

LAW

Connell Foley LLP

Kim Guadagno, Esq., Partner, Former Lt. Governor

“Companies go where the numbers make economic sense, and where they feel welcome,” says Guadagno. “New Jersey has a high-qual­ity workforce, and good logistics with our roads, ferries, trains, port and air transport access. While I was in office, we tried to support and enhance all of these. But affordability is a big issue.”

The CEO of a large consumer goods company with a South Jersey distribution center recently told her that “after good-faith, arms-length negotiations between labor and management, they settled on a $9-an-hour wage with benefits,” she relates. “But he is concerned that if the state raises the minimum wage to $15, they may need to leave for Pennsylvania, bringing the jobs with them.”

The state must also be responsive. “When business leaders were facing challenges, they called, and I always responded,” she says. “I am pleased the new administration has kept the economic development model I devel­oped, particularly the Business Action Center, which encourages entrepreneur­ship and promotes the state’s attractive­ness in this country and internationally.”

Guadagno plans to continue to be a resource for the many business leaders she’s met, helped and worked with, not­ing that she’s returned to the practice of law equipped with the cell phone number she’s given out for years.

Fox Rothschild LLP

Gerard Norton, Esq., Princeton Office Managing Partner

The state should continue to examine how to retain students after they complete college, says Norton. “State officials should also consider investing more resources to assist start­ ups,” he says. “Especially in industries with a high success rate, like logistics, life sciences, and information technology.”

Echoing a January paper that a transition team, assembled by Gov. Phil Murphy and Lieutenant Governor Sheila Oliver, released—Report of the Stronger and Fairer Economy Transition Advisory Committee—Norton says that, “We have to improve the state’s outreach to businesses and eliminate road blocks. New Jersey has lost a significant amount of small businesses to other states despite the presence of top universities such as Princeton and Rutgers, and the Route 1 corridor of technology and sci­ences companies.”

The state should also be rewarding companies that stay in New Jersey and hire local employees. “Not everyone will be the next Microsoft, but many will contribute to the economic well-being of the state.”

Four partners at Fox Rothschild have put their own money into these efforts, launching a $1 million angel fund, Delaware Crossing, that’s investing in startups across Princeton and Bucks County, Pennsylvania. “Offering support to entrepreneurs and established busi­nesses, and making the environment here friendlier, could mean a lot,” he adds.

Gibbons P.C.

By Michael J. Lubben, Esq .Financial Services Practice Leader; Director, Corporate Department

Today’s regulatory environment is par­ticularly challenging for New Jersey busi­nesses. While Washington looks to rollback regulations impacting a variety of industries, Trenton seeks to create or expand legislation impacting local busi­nesses. Putting aside this dichotomy, even though the rules continually change and are sometimes unclear, companies still must compete to play the game. We fre­quently assist clients in transactions involving government regulations, includ­ing in healthcare, insurance, lending, and real estate matters. Often, we are faced with “one-size-fits-all” legislation that does not provide much, if any, leeway to state agencies or departments to create practical resolutions when one is appro­priate. Authorizing commissioners and agency heads to issue waivers—and let­ting businesses know that, while New Jersey will regulate you, it will do so in a practical and fair way—would go a long way in making New Jersey a better place to do business. This ever-evolving legisla­tion creates barriers to entry for competi­tors, but also creates new markets and opportunities. Our advice to New Jersey businesses is to be nimble and stay abreast of changes that might impact your industries. Doing so will help foster success and improve your chances to “win” the game.

Greenbaum, Rowe, Smith & Davis LLP

By Jack Fersko, Esq., Co-Chair, Real Estate Dept.; Chair, Cannabis Industry Practice Group

Given the recent expansion of the New Jersey medical marijuana program, and Governor Murphy’s goal of legaliz­ing adult cannabis, there are several policies that could be enacted to make New Jersey a better place to do business for the cannabis industry. New Jersey should consider adopting policies similar to those adopted in several California cities, which promote equitable owner­ship and employment opportunities in the newly developed legal cannabis industry. For example, New Jersey should consider policies that provide certain priority processing of applica­tions for businesses that will operate in low-income areas or that will have minority ownership. Another policy con­sideration would prioritize applications from individuals previously convicted of a cannabis-related crime that would be a misdemeanor or yield only a cita­tion under any new cannabis law struc­ture. Finally, a capitalization assistance program should be evaluated to facili­tate minority ownership. These policies would assist in reducing issues of wealth disparity, while addressing the dispro­portionate impact criminalization of cannabis has had on minorities and minority communities.

Harwood Lloyd, LLC

By Thomas Loikith, Esq., Partner

New Jersey has many advantages that make it a good place to do business: an excel­lent location, educated workforce, low crime rate and strong technology sector. But New Jersey also ranks at or near the top in taxation, oppressive and confus­ing environmental regulations and aging infrastructure in need of repair. To make it a better place to do business, the state needs to address its high prop­erty taxes and environmental regula­tions. The full effects of recent action on the federal and state levels remain to be seen, and it is important to be aware of ongoing judicial or administra­tive interpretations of such actions. In light of our national leadership, it is important to consider the effect on the client’s business of the 2017 Tax Cuts and Jobs Act and the repeal or delay in enactment of agency regulations. On the state level, clients need to be advised on initiatives like paid sick leave and legislation to preserve the deductibility of property taxes in light of the 2017 tax reform act.

Meyner and Landis LLP

By Scott R. Malyk, Esq., Immigration Practice Leader

Legislation should be adopted to support Chief Justice Rabner’s pursuit to keep New Jersey resi­dents free from federal intrusion when they participate in the judicial process, regardless of immigration status. Travel bans, increased scrutiny of visa appli­cants and heightened immigration enforcement all serve to create a chal­lenging atmosphere for the business community. We have been advising busi­ness clients on the importance of main­taining an accurate and proactive immi­gration compliance program for employ­ees. As federal policies and compliance requirements have tightened under the new administration, companies hiring employees on H-1B and L-1 work visas need to take extra special care. Similarly, worksite enforcement raids and audits by U.S. Immigration and Customs Enforcement (ICE) continue to increase in frequency and intensity under the new administration, as we saw recently with the raid of nearly 100 7-Eleven con­venience stores nationwide. Such an increase, when coupled with a recent doubling of civil penalties for Form I-9violations, makes this a very real and serious threat to all businesses in New Jersey. Keys to ensuring employer com­pliance with Form I-9 requirements include internal audits, human resources training, and having a proper plan in place should a raid or audit occur.

NPZ Law Group, P.C.

By David H. Nachman, Esq., U.S. Managing Attorney

Immigration and nation­ality laws which are favor­able to foreign nationals can help make the United States a more attractive place to open a business. As an immigra­tion and nationality law firm, we assist highly skilled foreign nationals and international investors to obtain work visas in the United States. Many foreign nationals are entrepreneurs who open new companies in New Jersey and hire U.S. workers, which subsequently increases the local employment rate and contributes to New Jersey’s tax base. The Trump administration’s policy to “Buy American, Hire American” is viewed as “anti-immigrant” and “isola­tionist,” which consequently diminishes the public’s perception of the contribu­tions that foreign nationals make to the local and national economy. We believe national policies which secure our bor­ders through “extreme vetting” can co-exist with more liberal immigration and nationality laws which will make it easi­er for foreign nationals to open busi­nesses in New Jersey, which would con­tribute to the local and national eco­nomic infrastructure.

Riker Danzig Scherer Hyland & Perretti LLP

By Jason D. Navarino, Esq., Practice Leader, Tax Partner

Businesses like clear rules. Some rules are better than others, but uncertainty is often worse than certain but costly rules, which can be planned for. That’s why it’s important for regula­tors to understand how rules will be interpreted and provide clear and steady guidance that businesses can rely upon. For example, New Jersey, like many states, requires buyers of business assets in bulk to notify the state before closing so the state can ensure the seller’s state taxes get paid. It’s bad enough that New Jersey, unlike most states, uses the process to get an advanced payment on the seller’s not-yet-due taxes on the sale, it also interprets the term “in bulk” broadly and takes the unusual position that the rules apply to both stock and asset sales. But the clearest explanation of the rules is an online FAQ that fre­quently changes. This makes planning difficult Another example is the distinc­tion between employees and independ­ent contractors. The distinction is fraught with economic significance. But the federal and state tax and labor rules on the subject are vague and often conflicting, making it difficult for busi­nesses to predict whether their distinc­tions will be respected.

Sills Cummis & Gross P.C.

By Peter G. Verniero, Esq., Chair, Corporate Internal Investigations and Appellate Practice Groups

A clear set of commercial rules and policies can help every business plan for the future; that’s why it’s critical for commercial statutes and regulations to be written and construed unambiguous­ly. The substance of these rules and laws reflect many policy goals, including pro­tecting consumers and the environment; ensuring a workplace free of discrimina­tion; growing the economy so that everyone can benefit; and providing businesses with the opportunity to com­pete fairly and to create jobs in all sec­tors. Those goals should not be seen as mutually exclusive, but instead as part of what makes New Jersey an attractive place in which to live and work. We assist our commercial clients in under­standing the laws and policies affecting their lines of work. From that perspec­tive, lawyers should strive to bring clari­ty to a client’s understanding of an ever-changing regulatory environment so that businesses can operate properly and to their full potential, for the benefit of all stakeholders.

MANUFACTURING

NJMEP

John W. Kennedy, President and CEO

“New Jersey needs to do more to reach out to businesses, particularly to the STEM [science, technology, engineering, and mathematics] companies, and ones in manufacturing and life sciences,” says Kennedy. “The state has taken some positive steps such as the Legislative Manufacturing Caucus and science and technology committees, but with talk about new taxes, a higher mini-mum wage and more regulations, New Jersey is sending a mixed message to businesses.”

The state has about 11,000 manufac­turers, “and 80 percent have received attractive offers to move to other states, from ones down South to nearby Pennsylvania, which picks off our com­panies all the time,” he adds. “The state keeps creating Urban Enterprise Zones, but the inner cities don’t have the real estate that manufacturers need.”

Some politicians demonize businesses instead of talking with them, says Kennedy. “It becomes very difficult to run a company here.”

He wants more cooperation between educational institutions, politicians and business owners. “We’ve created this ‘us vs. them’ silo, but that won’t solve any­thing,” Kennedy reports. “I’m optimistic because of success stories like the evolu­tion of Newark and because we’ve got a lot of people and companies and politi­cians who want things done right, but, we all need to communicate, or change won’t happen.”

Plast-O-Matic Valves, Inc.

Judith DeLorenzo, Chairman

Cutting taxes and reducing burdensome regulations would go a long way in making businesses look at New Jersey more favorably, according to DeLorenzo. “It would be nice if companies that hire fulltime workers with medical benefits, life policies, 401K accounts, etc. got some kind of incentive.”

She would also like to see universities work more closely with businesses. “We offer paid internships to university students when it’s appropriate,” explains DeLorenzo. “It would be great if the universities offered more interns and communicated more with us. Everyone would benefit.”

But one recent legislative develop­ment has her worried. “Governor Murphy recently signed a measure [the Diane B. Allen Equal Pay Act] that bans unequal pay for ‘substantially similar work’ and allows people who allege this to sue for up to six years of back pay,” says DeLorenzo. “But it’s not easy to say that people are doing ‘substantially similar work,’ because one person may be much more efficient than another, or there may be subtle but significant differences in their jobs. Also, the new law prohibits employers from keeping employees from discussing their pay with others and provides for significant penalties for a supposed violation [courts can now award treble damages for violations]. When you’re in a company, people have different responsibilities and, if they swap salary information in the workplace, that can cause conflict. The bottom line is that people should be paid for the job they’re doing, not because a law demands it. Let businesses run and keep people employed without government demands.”

OFFICE SERVICES

Electronic Office Systems

Andrew W. Ritschel, President

New Jersey has many things going for it, but the state needs to make some changes to attract and retain businesses and talented employees, says Ritschel. “The key issue is to make it easier to live and work here. That involves enhancing commuting options, and addressing the high cost of real estate, insurances and taxes.”

He points to New Jersey graduates with engineering and science degrees who are leaving the state for better job opportunities. “We’re training the peo­ple, but they’re not staying here in New Jersey. To attract high-tech and other companies, we need to do a better job of keeping our local graduates here and make it easier for the new, highly edu­cated immigrants to stay here as well. Converting empty office parks into lower-cost townhouses for multi-use communities, and housing for new grad­uates and others would also be a step in the right direction.”

Ritschel says that extending mass tran­sit projects, like the light rail system in Hudson County and Newark, “to con­nect large numbers of people to more work areas,” would also be a positive step. Roadway improvements, such as “keeping traffic flowing with time-coor­dinated smart traffic light systems and fixing chronic New Jersey roadway bot­tleneck points” would also reduce com­muting times, enhance worker produc­tivity and grow state commerce.

“Raising the minimum wage is counter­productive,” he adds. “That will only spur businesses to replace low-skilled andentry-level people with technology.”

REAL ESTATE

NAI James E. Hanson

William C. Hanson, SIOR, President

Compared with many other states, New Jersey hasn’t done well when it comes to met­rics like business friendliness, notes Hanson. “Our consistency stems from high regulatory burdens, rapidly increas­ing taxes and a high cost of living. This perfect storm scares off new businesses hoping to move to New Jersey and drives existing businesses and their tal­ented workforce out. For far too long, many have dangerously assumed that our location in the shadows of New York City ensured our spot as a desirable place to do business, regardless of our continu­ous poor business friendliness ratings.”

He says it is now time “for our state’s leadership to begin taking these rank­ings seriously and recognize that our location is not enough to entice new businesses and retain existing ones. Much of this begins with decreasing the regulatory burden placed on businesses so they can grow and thrive. It also requires decreasing the high taxes and cost of doing business in our state, which not only impacts the business communi­ty, but places significant strains on our residents and workforce. Through work­ing collaboratively with the business community, instead of confrontationally, New Jersey can once again be a great place to do business.”

NAIOP NJ

Michael McGuinness, CEO

“Despite New Jersey’s enviable access to great transportation infrastruc­ture, educational opportunities and exciting recreational, cultural and urban amenities, we are over-taxed and over-regulated,” explains McGuinness. “We need to make New Jersey more afford­able to succeed in attracting and retain­ing new entrepreneurial businesses, and the young talent it takes to run them. The best place to start is at the local and county levels. Regionalizing services—public safety, public works, education, and governance—should result in more affordable communities where young businesses can invest and young people can raise their families.”

Deploying critical financial resources to upgrade and modernize our trans­portation systems also needs immediate attention, he adds. “The projected growth in population and increasing cargo coming into our ports depends not only on a skilled logistics workforce, but also on a robust road, water, rail, bridge and tunnel infrastructure. This includes the completion of the Gateway rail tunnel project connecting Manhattan with New Jersey.

“Modifying incentives and PILOT (pay­ment in lieu of taxes) agreements to reflect market and workforce needs is essential to encourage and channel investment in revitalizing areas in need of redevelopment and to generate new tax revenue and create housing and jobs. Towns also need to re-zone to pro­vide for 24/7 live, work and play envi­ronments, which would benefit from easier access to affordable liquor license permits.”

Prism Capital Partners

Edwin Cohen, Principa lPartner

Edwin Cohen would like to see the state improve its financial approach, perhaps adopting a long-term plan to reduce the budget deficit and “improve our infrastructure, while revisiting and further supporting programs that have contributed to growth.”

Cutting taxes for businesses and indi­viduals “is essential,” he adds. “Polls consistently rank taxes as a big concern in New Jersey, and this is an issue that has existed for a long time.”

Some state initiatives, such as GrowNJ and other incentive programs, have helped to attract companies here, accord­ing to Cohen. “I hope the Murphy admin­istration continues to support them.”

Prism Capital Partners is doing its part, he says, noting that the company estab­lished a vibrant mixed-use project, which includes cutting-edge biotech firms, educational institutions and major cor­porate users among others, on the 116-acre site of the former Hoffman-LaRoche campus in Nutley and Clifton that’s been renamed ON3.

“Bioscience and biomed companies, hospital networks and other healthcare-related organizations have provided much of the growth in New Jersey, so the state should encourage them,” head vises. “Startup and other healthcare-related small and large businesses are rapidly growing in New Jersey.”

RH Funding Corp.

Marc C. Demetriou, CLU, ChFC, Branch Mgr./Mortgage Consultant

New Jersey offers a “fast-paced, exciting environment with many business opportunities,” says Demetriou. “But property taxes, and personal and corporate income taxes are taking too big of a bite. They need to be reduced, if we’re going to attract and retain people and businesses.”

As a start, he suggests reviewing municipalities “from a business point of view, trying to cut waste by adopting shared services and considering mergers where appropriate. The state could also review its incentive program and consid­er trying to target specific growth indus­tries and businesses.”

He’s concerned about the way that many affluent residents are leaving the state and believes that “the bottom linefor many of them is the tax burden. The first step in any solution is to solve that challenge.”

TECHNOLOGY

New Jersey Innovation Institute (NJII), an NJIT Corporation

Dr. Donald H. Sebastian, President and CEO

“Innovation” has shifted from large companies to small companies and start­ ups, and the state needs to adjust its incentive programs and other policies accordingly, says Dr. Sebastian.

“In recent years, corporate tolerance for risk has been reduced, and the base of innovation is shifting to smaller, disruptive companies that make the discoveries with an eye to being acquired—corporate R&D is being replaced by M&A.”

He says NJII is trying to help by build­ing micro-clusters, around specialized facilities and incubators that offer small technology and other startups “access to assets they need and exposure to tech partners, future buyers and investors alike.”

One example is NJII’s Cell and Gene Therapy Development Center. It is train­ing employees for Celgene, a Summit-based biopharmaceutical company, for the jobs of the future, while creating a tech and biopharma manufacturing resource for companies large and small.

“But the state needs to do more to encourage this, too,” explains Dr. Sebastian. “Massachusetts started a similar effort more than a decade ago, and it’s now eating our lunch, attracting many high-tech and other innovative companies.”

WINE & SPIRITS

Garden State Wine Growers Association

Tom Cosentino, Executive Director

To attract and retain businesses and support entrepreneurs, New Jersey needs to cut regulations, reduce taxes and provide more incentives, according to Cosentino. “Economic development organizations such as Choose New Jersey have done a great job, but neighboring states spend a lot of money to market their products and attract New Jersey’s businesses. It’s a challenge competing with places like New York City and Philadelphia.”

He says the state also needs a coordi­nated, long-term plan that addresses educational opportunities while encour­aging targeted industries, which would “help the tax base and create jobs that will keep graduates in the state.”

Another challenge is that “businesses outside of New Jersey often see the state as being too expensive, and instead go to North Carolina or other lower-cost states. Say a company in the Midwest is looking to relocate to New Jersey—they’ll look at our relatively high corporate tax rates, and then they’ll ask what happens if they try to relocate their employees here: The workers’ property taxes could triple. Remember, you’re not just luring companies here, but their employees, too. It will be very difficult to be competitive until costs here are reined in.

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