Proposed NJ Tax Raises Outcry From Businesses, Cheers From Advocates

A controversial business tax proposal involving Medicaid in New Jersey is raising an outcry from critics and cheers from supporters.

The final sprint to Gov. Mikie Sherrill's first state budget has begun, with a July 1 deadline rapidly approaching.

In her budget address earlier this spring, Sherrill gave some grim news: New Jersey is looking at an estimated $3 billion structural deficit, one of the worst gaps in the nation.

State Treasurer Aaron Binder has blamed the financial crunch on increased costs for health care, school funding, employee benefits and direct property tax relief. Binder also pointed to pension payments and debt service as major factors, and said that federal spending cuts scheduled to start in 2027 are adding to the problem.

Sherrill has suggested making roughly $2 billion in cuts to help balance the books. The governor is also proposing millions in new business taxes – including a fee for private companies with workers on Medicaid.

Under the proposal, any company with 50 or more employees on Medicaid would have to cover their workers or pay a fine to the state. The proposal would reduce strain on hospitals, easing the expected surge in emergency care: the most expensive kind, Sherrill said.

It’s expected to raise $145 million per year, the governor said.

Sherill said the new tax will help New Jersey cope with an upcoming drop in federal health care funding by asking large companies to beef up their own coverage.

“Instead of asking taxpayers to foot that bill, this budget looks to large employers,” she said.

• Related: Sherrill Addresses How NJ Will Respond To Federal Medicaid Challenges

NJ COMPANIES WITH WORKERS ON MEDICAID

Hundreds of thousands of workers in New Jersey have low-enough paychecks to get Medicaid.

Large companies employ more than 132,000 New Jersey workers in New Jersey whose low incomes qualify them for Medicaid, a report from New Jersey Advance Media recently found.

The top 10 private companies that made the NJ.com list were: Amazon (15,574), Walmart (10,207), Century II Staffing (9,140), Wawa (7,606), Target (5,210), Saker ShopRites (4,209), Home Depot (4,218), FedEx (3,440), CVS Pharmacy (3,265), and Dollar Tree (2,892).

One of those companies, CVS, allegedly “paid zero federal corporate income taxes” in its most recent fiscal year – even though it raked in substantial profits, according to the Institute on Taxation and Economic Policy.

• Related: These 88 Corporations Paid Zero Federal Income Taxes Last Year, Report Says

Other companies with thousands of workers on Medicaid in New Jersey recently landed on a list of businesses with “overpaid CEOs,” including Amazon, Dollar Tree, FedEx, Home Depot, Target and Walmart.

• Related: 'Overpaid CEO' List Includes Companies With Big Footprints In New Jersey

CRITICISM AND SUPPORT: WHAT THEY’RE SAYING

The governor’s Medicaid proposal has seen stiff criticism from business advocates, who say it will penalize job creators for something they have “little to no control over.”

Earlier this month, a coalition of industry groups wrote a letter to New Jersey lawmakers, urging them to reject the new tax and outlining nine “flaws” in the proposal. Signatories included the New Jersey Business & Industry Association (NJBIA), New Jersey Chamber of Commerce, New Jersey Restaurant & Hospitality Association, New Jersey Retail Merchants Association and Six Flags Great Adventure, among others.

“While we appreciate the Legislature’s ongoing efforts to address health care affordability and ensure the long-term sustainability of Medicaid, this proposal is fundamentally flawed and unworkable public policy that would make New Jersey less affordable, less competitive and less welcoming to employers and working families alike,” the letter said.

• Related: Major Store Closures, Job Cuts Hit NJ In 2026

NJBIA president Michele Siekerka panned the new tax on Monday as the Legislative budget committees advanced the state’s $60.7 billion spending plan.

“Nearly all of the revenue-raisers in this budget are on the backs of business, despite having one of the worst business tax climates in the nation,” Siekerka said.

“While compromises were made on the per-employee fee on businesses with more than 50 employees using Medicaid, many of our job creators will be penalized for something which they have little to no control over,” Siekerka added.

“And, yes – workers on Medicaid will still be impacted,” she said.

• Related: NJ Republican Wants State To Trim These 2 Taxes: Here’s Why

Meanwhile, social justice advocates argue that new taxes for the wealthiest corporations in the nation are long overdue in New Jersey.

“The tax system we have is not designed to keep up with the current economic system where there is a huge accumulation of wealth in the hands of a few billionaires, and now a trillionaire,” said Maura Collinsgru of New Jersey Citizen Action.

“We need to end the budget Hunger Games that we see every year, where really good programs and really essential needs are pitted against one another because we don’t have the political will to raise enough revenue from those that have more than they’ll ever need,” Collinsgru said.

Sara Lilja of the New Jersey Coalition of Religious Leaders pointed to the United Way of New Jersey’s annual ALICE report, which found that 40 percent of New Jerseyans are struggling each month to make ends meet.

“At the same time, mega-corporations and millionaire households are doing better than ever in New Jersey,” Lilja said. “This is immoral, and we need to seriously consider new revenue to address the structural deficits that keep these injustices going.”

• Related: ‘Tax The Rich’: NJ Advocates Pressure Lawmakers As Budget Season Heats Up
• Related: Momentum Builds For NJ ‘Polluters Pay Act’ As State Budget Deadline Nears

MEDICAID IN NEW JERSEY

The state’s publicly funded health insurance program, NJ FamilyCare, includes Medicaid and Medicaid expansion populations. Eligible residents can receive free or low-cost health care coverage that covers doctor visits, prescriptions, vision, dental care, mental health/substance use services and hospitalization.

Adults ages 19 to 64 with incomes up to 138 percent of the federal poverty level are eligible for NJ FamilyCare (currently $1,836 per month for a single person and $2,489 per month for a couple.

Children can qualify regardless of their immigration status. In general, immigrant adults must have legal permanent resident status in the United States for at least five years in order to qualify, with some exceptions allowed for refugees and asylum grantees. Immigrants ages 19 and 20 who are lawfully present and have very low income ($509 per month for a single person and $805 per month for a family of two) can also qualify. Pregnant women who are lawfully present can qualify regardless of the date that they entered the U.S.

• Related: 12 NJ Hospitals Could Face Closure After Federal Medicaid Cuts, Report Shows
• Related: Business Fees In Sherrill’s First Budget Raise Concerns

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