New Jersey is going to bat for its residents so that they can work from home—and avoid their expensive New York commutes

January 10, 2023, 9:49 PM UTC
New Jersey Gov. Phil Murphy
Phil Murphy, governor of New Jersey, speaks during the 2023 State of the State Address at the New Jersey State House in Trenton, New Jersey on Jan. 10, 2023.
Aristide Economopoulos—Bloomberg/Getty Images

New Jersey Governor Phil Murphy proposed offering incentives to employers for establishing work-from-home and hybrid staffing policies in a bid to end the double taxation for residents who commute to New York City.

Murphy made the proposal on Tuesday during his annual policy address in Trenton — his first one in person since the coronavirus pandemic — without giving specifics. The second-term governor, a 65-year-old Democrat and retired Goldman Sachs Group Inc. senior director, came to office in January 2018 with promises to revive New Jersey’s economy. As of November, the state’s unemployment rate was 3.4%, below neighboring New York’s 4.3% and Pennsylvania’s 4%.

Across River

About 400,000 New Jerseyans work in New York City and pay as much as $3.7 billion a year in New York taxes, according to US Representative Josh Gottheimer, a Democrat. Each such resident would save almost $20,000 in annual taxes and commuting costs by staying in New Jersey full-time, according to Gottheimer.

“In the new, post-pandemic business environment, not every new job created for a New Jerseyan is going to be housed in a physical office in New Jersey,” Murphy said in his speech. “For many New Jerseyans, working remotely is here to stay. So, let’s take this moment to focus on incentivizing jobs in New Jersey, wherever they are, regardless of whether they are in an office building in Newark or at a kitchen table in Cherry Hill.”

Murphy’s proposal is another front in a broad strike at New York to end residents’ continued out-of-state tax burden after the pandemic spawned permanent work-from-home or hybrid arrangements. Bipartisan New Jersey legislation, introduced last year, would offer a $2,000 bonus for residents who successfully appeal their New York income-tax bills. That proposal would adopt the “employer convenience” rule, under which New York collects income tax on nonresident commuters. New Jersey would start a $25 million grant program to incentivize New York businesses to open New Jersey offices.

“If you’re paying full freight in the old, traditional going and commuting into work every day when in fact you’re in a hybrid reality today, that’s just not fair,” Murphy told Bloomberg TV in November.

Double Taxation

New Jersey was among 14 states that in 2020 filed a US Supreme Court brief to support New Hampshire’s efforts to end a similar double-tax rule in Massachusetts. The high court didn’t take up the case.

New Jersey, unlike neighboring New York, relaxed employer income-withholding, corporate-business and sales taxes throughout the pandemic as workers fled hard-hit cities to work remotely.

Upheaval in Washington leaves Murphy with a timely opportunity to start auditioning for a possible Democratic presidential run. As he sets the coming year’s agenda, though, the state’s minority—party Republicans are eager to ding any bragging points. Republicans applauded a federal judge’s ruling on Monday that suspended the concealed-carry firearms limits that Murphy signed on Dec. 22. Late last year they slammed his handling of $6.2 billion in federal pandemic aid, noting that only about $1 billion has been spent.

On Tuesday, Republican lawmakers said Murphy could bring inflation relief to the state immediately by spending that unallocated aid.

“Instead of solving big problems with those federal relief funds, like fixing our broken unemployment and motor-vehicle computer systems, Democrats have absolutely nothing to show for the windfall we received,” Senate Republican Leader Steve Oroho said.

New Jersey last year scored credit upgrades from Moody’s Investors Service, S&P Global Ratings and Fitch Ratings, and each agency has a positive outlook on the state’s debt. Murphy had sought such affirmation of his financial management. 

“The rating agencies trusted our leadership,” the governor said. “These new ratings mean money saved, literally, for every New Jersey taxpayer.”

A Fairleigh Dickinson University poll in November found Murphy’s approval at 40%, with 42% disapproving. Only 30% of Democrats say he should run for president, according to the survey of 801 residents. The Oct. 24-Nov. 1 poll of 801 residents had a margin of error of plus or minus 3.5 percentage points.

Political Action

Murphy’s wife and a former administration official last year started a political-action committee and an advocacy group, each capable of raising money to support a presidential run.

Though Murphy has said he is confident that Joe Biden will seek re-election, his speech was heavy on progressive policy — including legal marijuana and abortion access — that he favors pushing beyond New Jersey’s borders. 

Now Murphy is readying $2 billion in relief checks, expected by May, for the homeowners and renters who bear the nation’s highest property taxes, averaging $9,284 in 2021. Last week he signed legislation to speed construction permitting, which he says will lead to more affordable housing; funded abortion-provider safety upgrades; and hailed a $1.13 minimum-wage increase, the result of legislation he signed for $15 hourly pay in 2024. 

“People here are sharp, but rightfully skeptical,” Murphy said. “It’s a Jersey thing. So, let’s never insult their intelligence. Let’s always be honest and straightforward with them.They don’t want to see Washington-style dysfunction and chaos – and neither do we.”

Murphy said he will return to the legislative chambers in seven weeks to present his budget for fiscal 2024. “Making New Jersey more affordable for our families and seniors will again be central in the plan I will present to you,” he said.

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