Murphy wants to end a tax on NJ businesses but some say that’s a bad idea
⚫ Should NJ keep the Corporate Business Tax surcharge?
⚫ Gov. Phil Murphy says the surcharge will end but a new report argues it should be kept
⚫ NJ continues to have the worst-rated business climate in the U.S.
New Jersey has long been recognized as having the worst, most unfriendly business climate of any state in the nation.
Business groups argue one reason why is the Garden State has the highest corporate business tax in America at 11.5%.
Right now New Jersey has a CBT surcharge of 2.5% but Gov. Phil Murphy said in January the surcharge will be allowed to expire by the end of this year.
The New Jersey Business and Industry Association has praised the sunset decision, but some consumer groups, including the progressive New Jersey Policy Perspective, have been critical.
NJPP says don't end the surcharge
According to a new NJPP report, only the top 2% of businesses operating in New Jersey pay the CBT surcharge, including multi-national corporations not headquartered in the state like Amazon, Walmart, and Bank of America. The surcharge, enacted in 2018, is a 2.5 percent tax on every dollar of net profit above $1 million.
The report says if the surcharge is eliminated, the tax cut will primarily benefit the biggest and most profitable businesses operating in New Jersey. Corporations with at least $10 million in annual profit would receive 70% of the tax cut, according to state data compiled in the report.
Sheila Reynertson, a senior policy analyst at NJPP, said eliminating the 2.5% surcharge would cost the state at least $650 million in revenue every year so “the surcharge should absolutely remain in place to generate revenue from record-breaking profits that are being made right now.”
She said big corporations are raking in millions
She said big corporations in the Garden State have been making enormous amounts of money over the past few years “in part because of price gouging and stagnant wages and unchecked monopolies.”
She argued these large companies already enjoy tax loopholes “that allow corporations with unlimited resources to move taxable income out of the country to avoid taxation.”
She discounted the notion that businesses have avoided coming to New Jersey or expanding here because of the state’s high taxes, insisting Jersey has great transportation networks, a highly educated workforce and a healthy market of consumers.
Does trickle-down really work?
Reynertson said corporate tax cuts never trickle down to help consumers and workers.
“It just has not panned out to be true. In fact there’s a direct line between giving these mega-businesses a free pass, and to everyday hardships that the rest of us have to shoulder.”
She said New Jersey has more than its fair share of potholes, schools without air conditioning and trains and buses that always run late because the state is chronically underfunded.
“And so the idea that we would give away such a large chunk of revenue to very wealthy corporations, it’s just not good,” she said.