What Recession? A Look at How Much NJ Has Collected From its Major Taxes
TRENTON – Though there are concerns that a recession has begun or is looming, there still aren’t signs of an economic contraction in New Jersey revenue collections.
The state Department of the Treasury announced Monday that September revenues were nearly 12% higher than the same month a year earlier. Collections for the first quarter of fiscal 2023 are 14% ahead of last year, an increase of more than $1 billion.
The state budget projects that revenues will decline by 3.2% this year – but so far, so good.
“Revenue collections growth to date is encouraging,” the Treasury Department said in its announcement. “However, Treasury expects FY2023 collections growth to moderate in the coming months, particularly during the spring tax filing season when last year’s historically high collection levels are unlikely to be repeated.
“Despite the positive trends early in this fiscal year, Treasury continues to be concerned about numerous economic factors that are being closely monitored,” the department said.
July and August are quiet months for state revenue collections, but September is a significant one. Revenues for the month totaled $5.1 billion, up $539.4 million from September 2022 – which itself was up nearly 32% from the prior September.
Much like it’s doing now, the Treasury Department last September said it expected growth to moderate in the months to follow, which didn’t happen.
Here’s a recap of some of the state’s major taxes
Income taxes for the month were down 2% from the prior September – but that’s because there was one fewer Wednesday on which employers paid withholding taxes. There was an extra one in August, which led to apparent 25% growth that month. Across the entire quarter, collections were up 10%.
The sales tax totaled $1.019 billion for the month, up almost 9%. There’s a one-month lag in how the sales tax is reported and paid, so that revenue reflects August consumer activity – including the first half of tax-free back-to-school shopping. For the quarter, collections are up more than 10%.
Corporation business tax
The corporation business tax is up more than 8%, both in September and for the overall first quarter of the budget year. The state says it’s driven mostly by growth in quarterly estimates payments, partially offset by higher refund levels.
Pass-Through Business Alternative Income Tax
Collections from the Pass-Through Business Alternative Income Tax, or PTBAIT, the state created to enable business to reduce their federal tax bills approached $7758 million for the quarter – mostly in September, when $721 million was paid. The total is 1.5 times bigger than a year ago. Over time, the credits claimed for those payments will reduce state revenue collections, mostly the income tax.
Realty transfer fee
The state says home prices in New Jersey have begun to decelerate and the number of closings for home purchases has fallen. But for now, that’s not showing up in the realty transfer fee, which is up 10.6% for the quarter. A drop of 15% is anticipated for the full fiscal year.