OPINION
It’s always interesting when progressive groups take an “us vs. them” aim at corporations without providing the real facts about the contributions of New Jersey’s top job creators or any real context about the claims they make.
Case in point, this Opinion piece in New Jersey Globe on April 15 from New Jersey Policy Perspective Senior Policy Analyst Peter Chen.
Yet again, it’s the familiar and rather myopic mantra of “holding corporations accountable to pay their fair share,” without stating what they actually do pay or without presenting how our New Jersey businesses compare to other states.
So, as our top employers are now faced with $1 billion-plus tax hike, here’s some research over the rhetoric:
According to the latest information from the Council on State Taxation (COST), our businesses paid $34.1 billion in state and local taxes in FY22 – a figure perched upon the highest corporate tax rate and highest property taxes in the nation.
This also means that New Jersey businesses paid 45.3% of the total state tax burden in the state. Comparatively, businesses elsewhere paid about 40% of the total state tax burden across the nation.
Doesn’t sound like so-called “tax avoidance” to us.
Further, when New Jersey businesses are the only state in the nation in the top tier of the four major business taxes, we can affirmatively say they are paying well beyond their ‘fair share.’
While the NJPP piece assumedly tries to make a point about the percentages certain corporations pay for taxes nationally, it conveniently omits the fact that New Jersey corporations are stuck with the highest corporate tax rate anywhere.
When we are talking competitiveness of New Jersey’s tax policies versus other states, it is the state taxes that matter most — not some federal rate that businesses in every state pay.
Prior to the sunset of the 2.5% temporary Corporation Business Tax surtax, New Jersey’s largest employers paid an 11.5% top corporate business tax – which is the highest in the nation, by far.
Gov. Phil Murphy acknowledged this for an entire year when promising to sunset the temporary surtax. He also stated the need for our corporations to be competitive with other states so we can keep the jobs they provide here as recently as two weeks before his FY25 budget announcement.
But that’s when the governor unfortunately reversed course with the proposal of a permanent 2.5% Corporate Transit Fee, retroactive to Jan. 1, bringing New Jersey right back to a top corporate rate of 11.5% without a day of savings.
It may be easy for NJPP to completely avoid the theme of regional and national competitiveness as it relates to taxes, and yes, profits. But in the real world, neither policymakers nor businesses can afford to turn a blind eye to it.
Currently, neighboring Pennsylvania is on a path to a top CBT rate of 4.9%, without dedicating corporate taxes to transportation. And New York has now sensibly backed off a proposed corporate tax rate hike and keeping its rate at 7.25%, still well below New Jersey’s.
Since Gov. Murphy’s about-face on a corporate surtax, we’ve heard from many of our top employers. They’re understandably unhappy.
One key question we receive: How can we invest or reinvest in New Jersey when we cannot plan? Sadly, flip flop tax policy creates uncertainty and causes companies to avoid making major investments, be it in infrastructure or workforce.
Some based their 2024 financial projections on the promise of the governor to sunset the surcharge. Now, if approved, they will have to restate their financials with a claw back, which hurts their balance sheet and stocks.
Some companies who were already thinking about downsizing once their leases expire are now considering New Jersey for those reductions.
And others will pass through the added and unexpected costs for products and services to the consumer, which flies in the face of making New Jersey more affordable for residents.
The bottom line is that we all want to create good jobs in New Jersey for all our residents. This massive business tax increase stands in the way of that because we are a very negative outlier and far less competitive.
For all these reasons and more, we urge the Legislature to listen to the real story as it relates to our largest job creators and reject the $1 billion-plus Corporate Transit Fee.
Christopher Emigholz is the Chief Government Affairs Officer with the New Jersey Business & Industry Association.