Andrew Musick, Vice President, Government Affairs
The Legislature passed its FY 2019 Budget proposal and legislation that made a number of changes to the Corporate Business Tax (CBT), including a rate increase, last Thursday evening, sending it to Governor Murphy for his consideration. Additional changes were made to the CBT bill this past Monday evening.
Monday evening, lawmakers made more changes to the CBT. Both houses of the Legislature passed A-4262 to address and correct a number of issues in that original CBT increase bill related to the taxation of dividends and the decoupling of certain provisions from the Internal Revenue Code. However, the increase in New Jersey’s CBT, from 9 to 11.5 percent for corporations earning $1 million to $25 million and 13 percent for corporations earning in excess of $25 million, as well as other critical issues remain. The increase would put New Jersey in line for the highest corporate income tax rate in the nation.
On Tuesday evening, Governor Murphy offered a budget and revenue compromise to the Legislature. The compromise included a modified Corporate Business Tax surcharge on a recurring basis, with a rate that would not make New Jersey an outlier nationally. The compromise also included an increase in the Gross Income Tax rate for income over $1 million and a two-year, phased-in restoration of the Sales Tax, ultimately returning it to 7 percent. For a copy of the Governor’s letter, please click here.
In response, Senate President Steve Sweeney and Assembly Speaker Craig Coughlin issued a joint statement in which they noted that they submitted a fiscally responsible budget, and that they would review the proposal presented by the Governor along with other options they are evaluating.
The Governor announced earlier today that he would be meeting with Legislative leadership this afternoon. Additionally, both Houses have scheduled voting sessions for tomorrow, Friday, Saturday and Monday.
NJBIA continues to oppose any spending plan that includes a tax increase and continues to call for negotiations to focus on cutting spending verses increasing revenue through new taxes.
Please find below a recently released op-ed penned by NJBIA and nine other business groups, as well as a number of articles outlining the current budget negotiations in New Jersey, which include:
- Taxing Job Creators is Not the Way to Fix New Jersey’s Fiscal Woes
- Murphy offers budget compromise in meeting with top lawmakers
- Governor’s Compromise Tax Proposals Doesn’t Sit Well With Business Leaders
We will continue to keep you updated on matters as they progress. Constitutionally, a FY 2019 budget must be passed by the Legislature and signed by the Governor by July 1, 2018. If you have any questions, please contact me at AMusick@njbia.org.
