While Gov. Murphy did not address a new, $1 billion-plus business tax at the ReNew Jersey Business Summit hosted by the State Chamber of Commerce this week, some of the legislative leaders on hand did.
The governor has proposed a 2.5% Corporate Transit Fee as part of his FY25 budget, a retroactive restoration of an expired Corporate Business Tax surtax on corporations he had committed to for a year and again just two weeks before the budget announcement.
The tax would return New Jersey’s largest employers to an overall corporate tax rate of 11.5%, the largest in the nation by far.
“You have to keep your word,” said Senate Republican Leader Anthony Bucco (R-25). “You have to make it so these companies can plan for the future without being afraid the rug is going to be pulled out from underneath them.
“We certainly need to do a better job at being more competitive with our corporate business taxes, in the region and in the country,” added Assembly Republican Leader John DiMaio (R-23). “Our geographic location is second to none, but companies do feel bogged down.
“If they had more of their money to reinvest in New Jersey, they wouldn’t be going to places like North Carolina or looking to co-locate.”
One example of a large employer which has recently co-located is Siemens. Earlier this month, the company filed a WARN notice with the state denoting 162 job cuts at their Flanders location.
But in 2023, Siemens broke ground on a $220 million manufacturing facility in North Carolina, where the corporate tax rate is 2.5% – the lowest in the nation.
Simultaneously, New Jersey’s neighboring Pennsylvania is on a trajectory to cut its top corporate tax rate to 4.9%.
Senator Andrew Zwicker (D-16) said New Jersey should be concerned about competition from other states, with a caveat.
“But we also want to be data-driven,” Zwicker said. “Meaning let’s look at who’s creating more jobs. The value in New Jersey is we are creating more jobs than Pennsylvania.
“The question is are we going to continue to do that? Those of us who are legislators hear this all the time from business owners – they are trying to decide if they’re going to move the company or grow the company, and do you want to keep it in New Jersey or move to Pennsylvania or Delaware. So, of course we have to consider the ecosystem.”
Bucco mostly agreed with an oft-repeated take from Gov. Murphy about the value that companies receive by being located in New Jersey for their high tax dollars, but also said New Jersey is reaching a “tipping point” because of its extreme, outlier status for taxation.
“People are willing to pay a little bit more to be here to have access to the greatest public education system in the country, to have access to some of the brightest and best doctors in the world and the infrastructure that is second-to-none,” Bucco said.
“But there comes a tipping point and I think that’s why other states are doing what they’re doing by lowering the business tax to see what that tipping point in New Jersey is going to be to lure those people away.
“We’re going to get to a point where it’s so expensive to do business here, people are going to forgo opportunities and take them somewhere else.”
