While signs appear that New Jersey will let its 2.5% Corporation Business Tax surcharge sunset at the end of this year, there are even more indications why it’s a good idea for the state to lower it beyond that.
Currently, New Jersey’s 11.5% CBT rate is the highest in the nation. Even with the scheduled, 2.5% surcharge reduction at the end of 2023, New Jersey’s 9% CBT rate would still be the fourth highest in the nation.
The topic was the main discussion at NJBIA’s Taxation and Economic Development Policy Committee meeting, held on Wednesday – particularly as Gov. Phil Murphy said earlier this month that he would likely let the CBT surcharge sunset this year.
“There is great need and want for structural reform when it comes to New Jersey’s CBT,” said NJBIA Chief Government Affairs Officer Christopher Emigholz. “With the overall highest business tax burden in the nation and other states reducing their CBT, New Jersey should be looking at reducing that rate even more to remain competitive.”
Audrey Lane, a representative of the Garden State Initiative (GSI) and Senior Vice President for MAD Global Strategy, presented the efforts made North Carolina, Pennsylvania, and Iowa to lower or completely eliminate taxes on corporate income.
Notably, North Carolina has committed to eliminate the corporate income tax by 2030, and Pennsylvania has begun the process of lowering its Corporate Net Income Tax rate incrementally from 9.99% to 4.99% in 2031.
Morgan Scarboro, Vice President of MultiState, also highlighted that since 2018, 13 states have reduced their CBT rate and more states are looking to increase their competitiveness through similar measures.
Emigholz also provided some positive tax news updates which included the recent passage of Assembly bills 4929 and 4295 as well as an expected CBT compromise bill to improve our state tax policies concerning GILTI (taxation of foreign income) and NOLs (net operating losses).
The event was also attended Deborah Bierbaum, Senior Tax Policy Advisor of MultiState, Amirah Hussain, Director of Government Relations at the NJ Chamber of Commerce and Michael Egenton, Executive Vice President of Government Relations at the NJ Chamber of Commerce, and KPMG Managing Director James Venere.