As Congress and the Biden administration try to break the deadlock on a $3.5 trillion spending plan that would fund a collection of programs by raising the federal corporate income tax to 26.5%, NJBIA is warning that CBT tax hike would have a devastating impact on New Jersey businesses.
In an interview with New Jersey 101.5 radio reporter David Matthau, NJBIA President & CEO Michele Siekerka pointed out that raising the federal corporate business tax from 21% to 26.5% would give New Jersey the highest combined state and federal CBT on the planet.
“New Jersey already has the largest (state) corporate business tax rate in the nation at 11.5%,” Siekerka told NJ101.5. “If you layer on that a new federal corporate business tax on top of that we will go from being the largest in our own nation to having the highest CBT rate in the entire industrialized world – right here in New Jersey.”
Most industrialized nations have combined corporate tax rates below 30%. If federal plan is enacted in its current form with a 26.5% rate, it would mean the combined federal and state CBT rate for New Jersey companies would be even higher than Portugal’s 31% rate, she said.
Siekerka said the federal tax reforms enacted four years ago have helped New Jersey manufacturing companies hire more workers, raise wages and increase production. Raising the federal CBT would be a huge setback, especially when manufacturers are already grabbling with labor shortages and other pandemic-related challenges.
“We have a hiring crisis. We have a supply chain crisis. Now, you want to put this additional cost burden on those exact businesses who are the ones who can bring relief to those issues,” Siekerka said.
Leaders in Washington have been trying to broker a compromise between different Democrat Party factions on the $3.5 trillion Build Back Better Act, which would overhaul federal health care, education, climate and tax laws. Reaching a compromise that lowers spending in that bill could also break the logjam on the separate federal infrastructure bill that has already been approved by the U.S. Senate, but has stalled in the House because of the deadlock on the larger bill.