A new front has opened in the discussion on economic development incentives, and journalist Tom Bergeron is bringing some reality to the discussion.
Bergeron, editor and chief content officer of the news website ROI-NJ, recently took a deeper dive on the sale of tax credits that are received in return for creating jobs and investing capital.
“Anyone spinning the idea that this was another example of those big, bad companies taking advantage of the state’s taxpayers has missed a few basic points,” Bergeron wrote in a piece titled, “Rhetoric vs. reality.” Those basic points include:
- Incentive programs were set up for the credits to be sold;
- The incentives are of no value to certain companies that receive them unless they can resell them; and
- Every incentive program across the country does the same thing.
“Simply put: This is how all the incentive programs in the past have worked — and how the programs Gov. Phil Murphy has proposed would work in the future,” Bergeron stated.
NJBIA President and CEO Michele Siekerka told Bergeron, “It makes me furious to hear this is being discussed. The whole intention of having these programs benefit small to midsize business is the ability to sell the credits. They’re set up exactly for that purpose, because pass-through companies like S-corps and LLCs would never be able to take advantage of these programs but for the ability to sell the tax credits and monetize them in order to create the investment back to their company.”
The sale of tax credits has come under scrutiny, as the state is without a major incentive program to attract large companies or keep the ones that are here from moving.
Gov. Phil Murphy has criticized what were New Jersey’s two main economic development incentive programs—Grow NJ and the Economic Redevelopment Grant (ERG) program. Both expired on July 1. Murphy wants different incentive programs aimed at innovation-oriented companies and startups, but the legislature has yet to introduce bills that would establish such programs.
While NJBIA has been open to changes to incentive programs, the association urged the state to continue Grow NJ and ERG until new programs were in place. New Jersey’s high taxes and extensive regulations make incentives critical to create jobs and attract capital investment.
The Legislature has passed a bill to extend the programs, but Murphy has not signed it.