Gov. Phil Murphy said Thursday that he has agreed to end a 2.5% corporate business surcharge that is scheduled to sunset at the end of 2023 – a considerable tax win for larger New Jersey companies.
“I’m on the side (of) a deal is a deal,” Murphy said on ‘Bloomberg: Balance of Power’. “We’ve committed that (the surcharge) would lapse and go away. And that’s where I am as we speak.”
In 2018, New Jersey’s corporate tax rate rose from 9% to a national CBT high of 11.5% with the 2.5% surcharge. The termed “temporary increase” was originally scheduled to phase down to 10.5% in 2020 and back to 9% in 2021.
The 2.5 percentage point surcharge, however, was extended by the Legislature in 2020 until the end of 2023.
At NJBIA’s Public Policy Forum last month, Senate Budget Chair Paul Sarlo said New Jersey must allow its extended corporate business tax surcharge to sunset at the end of 2023.
NJBIA President and CEO Michele Siekerka, however, suggested more should be done for New Jersey to compete with regional states. She explained that Pennsylvania has cut its 9.99% corporate tax rate by 1% effective in January and is on a path to gradually reduce the rate to 4.99% by 2031.
“The (CBT) sunset will be welcome and we will cheer to the mountains to see that happen — but that must be step one,” Siekerka said.
Assemblyman Gerry Scharfenberger and Assemblywoman Victoria Flynn have already introduced legislation (A-4907) that would get rid of the 2.5% surcharge, while also reducing the CBT rate to 7.5%.
NJBIA Chief Government Affairs Officer Christopher Emigholz said Murphy’s CBT forecast was “welcome news.”
“The business community appreciates Governor Murphy acknowledging that the temporary CBT surtax deal is supposed to sunset at the end of 2023 and is allowing it to do so,” Emigholz said. “NJBIA looks forward to continuing to work with him to make our state more affordable and competitive.”
To watch the interview, go here.