New Jersey has the unfortunate distinction of having the highest corporate business tax rate in the nation.
But under President Joe Biden’s federal tax plan, the Garden State’s corporate tax rate could actually grow into one of the highest in the industrialized world.
That’s why the New Jersey Business Coalition sent a letter to the state’s congressional delegation this week urging them all to oppose such an increase.
“Now is the worst possible time to increase this rate and harm our competitiveness,” the collection of nearly 100 business, trade and nonprofit groups wrote to New Jersey’s federal leadership.
“Businesses of all sizes, including our state’s manufacturers, will be impacted by this increase. A corporate tax increase would cost us jobs and economic output – something we cannot afford to do after the significant business struggles over the past year and a half.”
President Biden has proposed raising the federal corporate income tax rate from 21% to 25-28% to help offset any finalized infrastructure legislation.
The NJBC wrote that the United States is unique in that it layers state and federal corporate business tax rates – and that most nations do not have an additional state rate.
A federal increase to 25% would give New Jersey a combined corporate business tax rate of 33.6%.
By comparison, the highest corporate tax rate among Organiszation for Economic Co-operation and Development (OECD) nations in Europe is 31.5%. Japan has the highest OECD corporate rate in Asia, just under 31%.
“The worldwide average corporate tax rate is estimated at about 24%,” the NJBC wrote. “So New Jersey could surpass that by about 40%.”
The coalition also urged the federal lawmakers to oppose a proposed significant increase on Global Intangible Low-Tax Income, or GILTI. There has been talk from the Biden administration about doubling that tax rate from 10.5% to 21%.
“A GILTI increase will push multi–national businesses to leave New Jersey and seek out states with lower GILTI rates, because we are already a GILTI outlier in how harshly we treat it at the state level,” the NJBC wrote.
“A higher and less competitive federal corporate tax rate would further shine a light on New Jersey’s highest-in-the-nation state rate, along with our other substantial affordability issues.”
To read the full letter from the NJBC, click here.
