By Brian Bergen
The economic fallout from measures to prevent the spread of COVID-19 will likely be severe. Hundreds of thousands of employers and their millions of employees could be without a job in the coming months. We aren’t doing nearly enough to prevent such widespread harm, and it is largely self-inflicted.
Governor Murphy’s attempt to help small businesses was merely $75 million mostly to help subsidize loans. There are multiple problems with this approach.
First, it will only help about a half-percent of businesses in the state. There are 885,000 small businesses – those with less than 100 employees – and between 3,000 to 5,000 businesses might receive relief.
Second, loans won’t help businesses because adding debt in a cash-flow crunch will make it harder to recover. Loans are good when a business is able to increase margins, but are bad when a business is struggling. Having to pay another bill each month while recovering, or after recovering, is a setback. New Jersey’s business environment is more than enough to setback employers and entrepreneurs.
Third, state programs increase spending beyond whatever relief is provided. It costs money to administer money, and that is something the state – or, really, taxpayers – can’t afford. The point is to help the taxpayer, not increase their expenses.
Fourth, the government shouldn’t be picking winners and losers. Employers are struggling to keep their workers employed. Every business is critical to every employer, and should receive equal relief.
The state can take a different approach, and it requires putting state revenue second to personal income. Because if people aren’t earning income, the government isn’t taking in tax revenue.
The state can allow businesses to remain open and provide a sales tax holiday to lower prices for consumers. This will help businesses stay afloat by incentivizing people to buy while prices are low.
At the same time, we should allow businesses to keep their first quarter sales tax collections so they receive the money they need. It requires no further government action and is based on merit. The more successful the business the more sales tax remittance employers get to keep.
The state can ensure losses can be carried forward, prohibit insurance rates from rising because COVID-19 layoffs, and waive late fees on tax filers and extend the filing deadline. There are dozens of things New Jersey can do to help people make ends meet. It means the government taking less, not spending more.
For everything the state does to stop economic activity, it must ensure that businesses can continue operating after the pandemic is over.
BRIAN BERGEN is a former Army Officer and Apache Helicopter Pilot and a Republican Assemblyman representing New Jersey’s 25th Legislative District.