The New Jersey Society of Certified Public Accountants said it was “disappointed” that Gov. Phil Murphy is seeking to reinstate the corporate business tax surcharge in his FY25 budget – a move that would make the state an extreme outlier for business taxes again.
“NJCPA members, who serve tens of thousands of businesses and individuals, already hear objections about New Jersey’s high taxes from clients who are looking to leave New Jersey,” the NJCPA said in a statement issued after governor’s budget address on Tuesday. “In member surveys, 75% said they have recommended to some clients that they move out of state.”
Hikes in business taxes, like the Corporation Business Tax, only serve to dampen economic growth and lead to job losses, the organization said.
The FY25 budget proposed by the governor replaces a 2.5% temporary surtax on corporate income with a new permanent 2.5% “Corporate Transit Fee” levied on the largest corporations in the state to fund NJ TRANSIT. When combined with New Jersey’s existing 9% Corporation Business Tax (CBT), it raises the total tax rate on corporate income to 11.5%.
“The new CBT hike will again move New Jersey to the top of the list of states with the highest corporate tax rate, while our neighbor, Pennsylvania, is on a path to reducing its CBT rate to 4.99% by 2031, and 12 other states have reduced their CBT rates in the last five years,” the NJCPA statement said.
“While the NJCPA applauds the Governor’s efforts to make New Jersey more affordable for families, taxing the business community to make up for a shortfall in the budget is not in the best long-term interest of the state,” the NJCPA said.
The organization also noted that the governor’s proposed $55.9 billion FY25 budget is the largest in state history. Six years ago, during the final year of the Christie administration, the state budget was $35 billion.
“New Jersey can no longer sustain such a high rate of spending in the face of lower tax revenues, the absence of federal COVID relief funds, stubborn inflation, high interest rates and other economic headwinds,” the NJCPA said.
“The NJCPA would like the root causes of high property taxes to be addressed and believes that structural reform to public worker benefits is necessary to restore the state’s fiscal stability. We also believe that property tax relief should be extended to businesses which pay about half of the state’s property taxes.”
Currently, only residential homeowners and tenants are eligible for the state’s various property tax relief programs, including the $2 billion ANCHOR tax relief program that specifically excludes businesses.
