Right and left ally to bash idea of $7B in tax breaks for Amazon
If the political spectrum is seen as a straight line, there might not be too many organizations involved in Garden State politics further apart than New Jersey Policy Perspective and Americans for Prosperity.
But if it’s more of a circle or horseshoe, then one of the issues where the two sides converge is the proliferation of tax subsidies the state has awarded in the name of job creation – more than $8 billion since 2010, according to NJPP.
The biggest subsidy in state history could be on the horizon, if Amazon decides next year to build its second headquarters in New Jersey. State leaders have committed to provide the online-retail giant $5 billion in tax credits, should the anticipated $5 billion project yield the promised 50,000 jobs. And Newark, the state’s endorsed candidate, is offering $2 billion of its own sweeteners – $1 billion in property tax breaks and $1 billion in credits to offset the city’s wage tax.
Jon Whiten, the vice president of New Jersey Policy Perspective, said at a Monday news conference at the Statehouse that bigger tax credits for Amazon appear to be “on a greased track” for approval by January. But he said they rig the system, enrich those doing quite well, distort the tax code and shift the financial burden to other taxpayers.
“This bid reflects everything that’s wrong with New Jersey’s ‘tax breaks or bust’ approach to economic development,” Whiten said.
Erica Jedynak, state director for Americans for Prosperity, said the tax incentives disadvantage small businesses that aren’t eligible for them, not to mention residents who don’t get them. She said the state would be better off reducing tax rates and regulations.
“The status quo of offering these tax incentives is not working,” Jedynak said.
Thurston Powers, a legislative analyst for the conservative American Legislative Exchange Council, called the incentives “poison to the economy” that benefit the politically connected.
“Instead of pursuing this $7 billion public relations stunt, New Jersey politicians should dramatically reform their tax code, making it as broad and flat as possible,” Powell said.
All four legislative leaders have thrown their support behind Gov. Chris Christie’s proposal to expand the Grow NJ tax incentive program in a way that could provide Amazon double the regular benefit if it builds its second headquarters in New Jersey. It would do so by designating projects that yield 50,000 jobs as “transformative.” Amazon says its project will lead to as many as 50,000 jobs, with average salaries of $100,000.
However, Assemblyman John Wisniewski, D-Middlesex, said he expects a robust debate on the idea when the Legislature returns after the election. He said New Jersey should emphasize attributes such as its location and education system because it can’t compete financially with bigger states – let alone a company the size of Amazon, which had $38 billion in revenues last quarter. (Wisniewski said the company’s earnings were $28 billion in the first quarter of 2016, but that was its total revenues, not its profit.)
“That’s one state budget. They do that four times a year,” Wisniewski said.
Wisniewski says pledging $7 billion in incentives actually makes New Jersey look a little suspect to businesses who know it struggles to pay for its basic functions.
“I don’t believe that government exists to underwrite the business development needs of private corporations,” said Wisniewski, who questioned how the already underfunded mass-transit system would handle up to 50,000 employees heading to an Amazon headquarters in downtown Newark.
Whiten and Jedynak said New Jersey’s bid for Amazon should lean less on tax subsidies and more on Newark’s strengths, such as access to ports and freight corridors and proximity to New York and Philadelphia.
“With a proposal like this and $7 billion in tax breaks, we’re acting as if we’re South Dakota,” Whiten said. “We’re begging companies to come here. We’ve got a lot of other reasons for companies to want to be here.”
Amazon said Monday it received 238 proposals from states, provinces and other jurisdictions in the United States, Canada and Mexico seeking to land the project.
Incidentally, none came from South Dakota.
More from New Jersey 101.5: