New Jersey Supreme Court affirms appellate decision on Jersey City payroll tax


The New Jersey Supreme Court has affirmed an appellate decision on the Jersey City payroll tax, remanding the matter to the lower court for discovery.

By John Heinis/Hudson County View

Chief Justice Stuart Rabner was joined by Justices Anne Patterson, Lee Solomon, Fabiana Pierre-Louis, and Judge Jose Fuentes in affirming the decision, while Justice Barry Albin dissented.

“At this procedural posture, this case should have been remanded to permit the parties to take discovery and to give plaintiffs the opportunity to produce evidence to support their claim,” Albin wrote in his opinion.

“It may be that plaintiffs will fall short of their burden. The majority, however,
prematurely rings the death knell on that claim, and therefore I respectfully dissent.”

In February 2021, the Superior Court of New Jersey Appellate Division ruled that the payroll tax was constitutional, though further court proceedings would be needed to determine is the “commerce clause” was violated.

A group of nearly two dozen plaintiffs, led by developers Mack-Cali and Lefrak, appealed Hudson County Superior Court Assignment Judge Peter Bariso’s March 2019 decision that said having city businesses pay a one percent payroll tax that goes towards the public schools is legal.

“The lack of a complete record in this case is obvious. We have no idea whether plaintiff-businesses and other Jersey City employers actually face double taxation,” the appellate decision said.

“We also do not know whether the State or the City, faced with the prospect of our holding, would fashion another remedy, including, possibly striking the supervisor provisions entirely.”

At the end of September, it became known that the state Supreme Court would hear the case, as HCV first reported.

“On this bare record, we do not know the true extent of the payroll tax’s effect: whether and to what extent the payroll tax impacts Jersey City employers’ hiring decisions, and whether out-of-state resident employees are adversely affected by the tax,” Albin wrote today.

“Only if plaintiffs were given the opportunity to take discovery would we know whether the payroll tax has only an incidental effect on interstate commerce.”

Albin dissented from his colleagues on dismissing the discriminatory payroll tax claim, though agreed with their decision to remand to the lower court for discovery.

City spokeswoman Kimberly Wallace-Scalcione hailed the decision and a victory for the city and public schools.

“The Court denied the Plaintiffs’ petition on nearly every issue to preserve and uphold the payroll tax, including exemptions for Jersey City residents, and so this is a big win for the City and its public schools,” she said in an email.

“The overall intent of the payroll tax is maintained, which is to generate a steady revenue stream to our underfunded school district, while simultaneously saving Jersey City taxpayers from increased rates.”


Editor’s note: This story has been updated with a comment from city spokeswoman Kimberly Wallace-Scalcione. 

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