Could the proposed corporate business tax hike cost you more money?
Democrats on Capitol Hill in Washington D.C. continue working on a mammoth $3.5 trillion spending plan known as the reconciliation bill. The bill includes a proposed increase in the federal corporate business tax rate from 21% to 26.5%.
The proposal has some business leaders in New Jersey concerned, especially since it could mean a hike in the cost of doing business in the Garden State.
"New Jersey already has the largest corporate business tax rate in the nation at 11.5%,” said Michele Siekerka, president and CEO of the New Jersey Business & Industry Association. “If you layer on that a new federal corporate business tax on top of that we will go from being the largest in our own nation to having the highest CBT rate in the entire industrialized world – right here in New Jersey.”
Siekerka noted by comparison, the next highest combined rate is Portugal at 31.5%, while the vast majority of industrialized nations have combined corporate business tax rates below 30%.
She said federal tax reforms enacted four years ago have helped New Jersey manufacturing companies increase new hires, raise wages and increase production, adding that increasing the CBT would be a huge setback to those advances.
In an effort to make sure their voices are heard, business and manufacturing leaders have been in close contact with the state's congressional delegation on the issue, offering up data and statistics.
“The more everyone understands the significant impact this will have on our New Jersey businesses, and again in particular those manufacturers, the more that we think our delegation will go out there and fight on behalf of these businesses,” Siekerka said.
Compounding the matter are the issues that businesses are currently facing with hiring workers and a supply crunch for goods and products needed.
“We have a hiring crisis. We have a supply chain crisis. Now, you want to put this additional cost burden on those exact businesses who are the ones who can bring relief to those issues,” she said.
She said increasing this tax would be especially difficult on manufacturing companies in New Jersey that are not major corporations, but are vital to everyday life in the Garden State by ensuring "the house we live in is upgraded for the things that we need, to build new things, to create the cloths we wear, to drive the cars we have.”
Siekerka said raising the CBT will hurt everybody.
“The negative impact will be the increase in consumer price, a further strain on our supply, as well as the inability to attract and retain the workforce we need,” she said.
The CBT proposal could wind up being modified before Democrats craft a final version of the spending bill and try to pass it in the coming weeks.
You can contact reporter David Matthau at email@example.com.