In an op-ed published in the Asbury Park Press and numerous other Gannett publications this week, NJBIA President & CEO Michele Siekerka made a persuasive case for why lawmakers should resist the calls from progressive groups to reinstate the Corporate Business Tax surcharge, which would make New Jersey’s corporate tax rate the highest in the nation.
Siekerka’s op-ed is reprinted below.
Ralph Waldo Emerson once wrote that every sunset brings the promise of a new dawn.
But when it comes to the sunset of what was a temporary Corporate Business Tax surtax, there are unfortunately those who only look backwards to ensure that our businesses are the most taxed in the nation and our business climate is the most challenging.
The familiar cries from progressive groups to fund NJ TRANSIT and everything else on the planet through a never-ending draw on business taxes is hardly a surprise. It appears to be their only solution for anything, amid social media rants that are usually devoid of facts and context.
What’s more concerning, however, is when lawmakers don’t understand the full picture.
That one veteran lawmaker would actually say New Jersey businesses need to pay “their fair share” in response to the first proposed NJ TRANSIT fare increase in nearly a decade is concerning.
The truth is New Jersey businesses are already paying well beyond their fair share. And Gov. Phil Murphy absolutely made the right decision to sunset what was a temporary 2.5% surtax on the highest earning businesses.
New Jersey’s top-end rate with the temporary surtax was 11.5% the highest in the nation, by a long shot.
Even now at 9%, the Garden State still has the fourth-highest CBT rate nationally – which is also underscored by the highest property taxes in the nation, a high top income tax rate and a high state sales tax in our region.
On top of that outlier status, New Jersey businesses were hit with a more-than $1 billion unemployment insurance tax increase without any federal COVID relief to offset that increase, as most states had.
New Jersey businesses have also been excluded from any property-tax relief from the ANCHOR and Stay NJ programs, even though they pay nearly half the property taxes in the state annually.
And they face the costliest business mandates in the nation.
Further, as both the governor and Senate Budget Chair Paul Sarlo have accurately stated, lowering CBT rates is proven to be economically stimulative. There is much data showing how a more competitive CBT rate can decelerate outmigration of income-generating residents and businesses, increase home values and wages for our residents, as well as have significant downstream impacts for our small and midsize businesses and nonprofits.
But for the most obvious reason why New Jersey should not make their largest businesses an extreme national outlier for taxes, look no further than our neighbors across the Delaware.
This month, Pennsylvania Gov. Josh Shapiro announced he is investing $161 million more for the Southeastern Pennsylvania Transportation Authority this year, bringing the state’s total funding for SEPTA to $1 billion.
At the same time, the Keystone State is slashing its top corporate business tax rate in half – to 4.9% by 2031.
This is proof positive you don’t need to have the highest the highest top CBT rate in the nation to fund public transportation.
And those who don’t think large corporations won’t let a high CBT rate impact their decision to stay here or come here are kidding themselves.
Fact is, there is no nexus between the CBT and NJ TRANSIT, and most states do not use corporate taxes to fund their transportation systems. We should not turn a blind eye to how we compete with other states and add yet another new tax to business at a time of a multi-billion-dollar surplus.
Of course, the businesses targeted by progressives are maligned for the supposed crime of being profitable. They’re described as “mega-corporations” or “ultrawealthy.” But they’re never acknowledged for what they really are – the largest job providers in the state. Ones we want to keep here.
There is no doubt that funding NJ TRANSIT is a real issue that will require comprehensive solutions, and yes, inspired thinking, both in the short-term and long-term.
We can start by looking at a state budget that has grown 56% since 2018. We can explore other types of revenue mechanisms. We can re-evaluate how NJ TRANSIT is utilized in a post-pandemic world.
All of these and more should be up for discussion. But we must sunset the idea that New Jersey businesses should bear the responsibility for it with yet another burdensome tax increase.
