On behalf of our 20,000 member companies, the New Jersey Business and Industry Association (NJBIA) respectfully opposes S-1513, sponsored by Senator Turner, which attempts to address situations where companies utilize a tax inversion. We urge you to vote “no” when the bill comes before the Committee for a vote on September 12, 2016.
This bill targets companies that utilize corporate inversions to escape the anticompetitive federal Corporate Income Tax. A corporate inversion occurs when a United States based multinational corporation restructures so that the U.S. parent is replaced by a foreign parent.
To better understand the current tax environment in our country, we must put things in perspective. The Organization for Economic Cooperation and Development (OECD) is a unique forum where the governments of 34 democracies with market economies work with each other, along with more than 70 non-member economies, to promote economic growth, prosperity, and sustainable development. With a Corporate Income Tax rate of 39 percent, when combining marginal federal and state rates, the United States ranks 32nd out of the 34 OECD countries on the 2015 International Tax Competitiveness Index.
According to a 2015 report issued by the Tax Foundation, the OECD average top marginal corporate income tax rate is 25 percent. With the U.S. at 39 percent, it is clear why companies choose to utilize tax strategies such as inversions.
Additionally, New Jersey is part of a larger economy, as businesses are competing in a global market with companies from around the world. New Jersey is not an island in this system, and it is important that the state develops policies that encourage companies to operate here, not policies that create additional challenges.
Once again, NJBIA respectfully opposes S-1513, and we urge you to vote “no” when the bill comes before the Committee for a vote on September 12, 2016. Should you have any questions or need further information, please contact me at 609-858-9512.
TO: Members of the Senate State Government, Wagering, Tourism and Historic Preservation Committee
FR: Andrew Musick, Director, Taxation & Economic Development
DATE: September 12, 2016