NJBIA Testifies Against $1B Corporate Transit Tax on NJ’s Largest Job Providers

It will also give New Jersey’s largest employers the largest corporate business tax in the nation, by far, at 11.5% – even with neighboring states lowering their corporate taxes and without a constitutional dedication for its intended use to fund NJ TRANSIT.

I’d like to start by asking a few questions of this committee.

“Will this 20% tax increase on New Jersey’s largest job creators employing hundreds of thousands middle income wage jobs make us more competitive?

“Or will it result in job creation and economic growth?

“Or will it make New Jersey more affordable?

“Or will it help attract capital investment in New Jersey?

“You know the answer. It’s a resounding no to all.

“We’ve discussed this with you over the past five months and showed you why.

“We put forth data AND stories directly from the C suite; research that clearly shows that increasing the corporate business tax is terrible policy and frankly a blatant disregard for the stated needs of New Jersey’s largest job creators who employ the exact jobs we want to see grow here!

“I could restate the 40 direct reasons why this is bad policy, but you already saw our piece on that. Guess it doesn’t matter.

“I guess it’s also doesn’t matter that today in New Jersey, we have 14 Fortune 500 companies and in 2018, we had 22.

“And it doesn’t matter that states that have lowered their corporate business tax have proven better economic outcomes because of the stimulus from the reinvestment of that money into states economy. We shared data on that, too.

“Even worse, I guess the stories we told directly from impacted companies didn’t matter either — that while they may not leave the state of New Jersey tomorrow, they’ll question if they’re staying when their leases are up. We are now inviting that consideration.

“And when they grow their next 100 or 1,000 jobs, they will look to do so outside the state of New Jersey.

“Or that their workforce invites their employer to relocate to more affordable states. Or that the impact of the tax will run downstream to their supply chain, their workforce and affect the cost of products and services provided by these companies.

“This is easy math and Budget 101:  When you increase expenses, you clearly have to either raise revenue or make cuts elsewhere, like cutting further investment in their facilities and their workforce or finding revenue through increased products and services.

“What makes this action even more egregious is its retroactivity. This will cause companies to go back to a budget they already struck and to money they’ve already committed elsewhere, and perhaps spent, to find that 2.5% to pay back to the state, after the fact. This causes many of these companies to have to restate their financial statements.

“This is something that Wall Street frowns upon, and therefore affects the stocks of these companies, which many of our New Jersey families, businesses, and even our own state programs and pensions are invested.

“And it certainly doesn’t seem to matter that this $1 billion will sit in surplus for one year. That is $1 billion that for one year will not be reinvested by these affected companies directly into New Jersey’s economy — money that could have been stimulating the economy providing even more return on investment for our budget next year.

“Clearly this is a lost opportunity and one that is hard to understand.

“What could you have done instead?

“First, you could’ve chosen to look more comprehensively at our spending and decide to actually, for once, address our spending versus, allowing the budget year-over-year to continue to increase.

“A reminder: This budget is 60% higher than it was seven years ago.

“Another reminder: Last year’s budget submitted from the Legislature had $1 billion more spending than even the governor’s proposed budget – ironic in its the same amount being taken from our job creators today.

“Today you are poised to pass a budget that includes further additional spending discretionary in nature and not necessarily aligned to the state’s priorities.

“You could have even minimally softened this blow by allowing the types of offsets and tax credits to this additional 2.5% that companies are entitled to by law on the 9% corporate business tax that exists today.

“Despite your acknowledgment and recognition during our outreach that this is indeed bad policy affecting our business climate and our regional competitiveness, you are choosing to move forward with giving New Jersey not just the largest corporation tax in the nation but putting New Jersey in outlier status as the only state in double digits and by far.

“For 18 months we said the CBT sunset was a line in the sand and for good reason. But here we are ready to make New Jersey stand as an outlier especially when our state to the west Pennsylvania is driving CBT down and at the same time New York removed an increase that they were considering. These are both actions based on regional competitiveness.

“I can only hope that one year from now we are not standing here once again, having to look at another broken promise – that the intended purpose of this money does not to go to NJ TRANSIT, but is being utilized elsewhere and for other purposes because ‘we need the cash.’

“Broken promises and the inability to count on the word of our policymakers sends a terrible message to any business considering staying here, growing here, coming here or investing here.

“It’s an incredibly sad day when we have to report that our New Jersey policymakers could not do better by New Jersey business and our largest job creators – and that we missed an extraordinary opportunity to send a positive message that you do, in fact, listen to the concerns of business; And that business and job creation in the state of New Jersey matters.”