New Jersey Supreme Court to review ‘commerce clause’ in Jersey City payroll tax case


The New Jersey Supreme Court will review the “commerce clause” in the Jersey City payroll tax case at an upcoming date yet to be determined after the appellate court remanded the matter to the county for further review earlier this year.

The New Jersey Supreme Court. Photo via

By John Heinis/Hudson County View

The payroll tax applies to out-of-town employees who work in Jersey City, while residents are exempt, which Mack-Cali argues may violate the U.S. Constitution’s commerce clause.

The court agreed to hear the residency exemption aspect of the case after the Mack-Cali Realty Corporation filed a petition for certification, who, along with some subsidiaries initially filed the lawsuit against the state and the city in Hudson County Superior Court back in December 2018.

While they lose that case, they challenged the decision and the while the Superior Court of New Jersey Appellate Division ruled that the one percent payroll tax is constitutional in February, they also remanded the commerce clause back to the county – who will not be hearing the case now in favor of the state Supreme Court.

“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 court ruled.

“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.”

The City of Jersey City, the board of education, and Mack-Cali all did not return inquiries seeking comment in anticipation of the latest wrinkle of this case.

The payroll tax was implemented to help offset some of the ongoing funding woes experienced by the school district, though it hasn’t always gone as smoothly as anticipated.

The BOE approved a $814 million budget with an annual tax increase of about $996 per home assessed at about $460,000, with Superintendent of Schools Franklin Walker noting that the payroll tax revenue had been certified at around $65 million – despite a projection of about $85 million.

On Thursday, the BOE passed a resolution for the requisition of taxes other than debt service that said the city owes at least $7,819,177.82 towards the payroll tax, which should’ve come out to a total of $86,010,956.



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