Last year at this time, as NJBIA was gearing up to fight the millionaires tax, the association wound up with two strong allies—Senate President Stephen Sweeney and Assembly Speaker Craig Coughlin. The two legislative leaders held firm in their opposition to Gov. Phil Murphy’s proposed tax increase for the 2020 fiscal year, and the budget that eventually become law contained no broad-based tax increases.
A year later, NJBIA is again gearing up to fight the millionaires tax, but now the association has a proposed corporate business tax increase to battle as well and one of last year’s legislative leader allies looking a little less against tax increases. The CBT proposal is Sweeney’s. (Speaker Coughlin has stated he is cautious about any broad-based tax increases.) Sweeney has even said he would agree with the millionaires tax this time around in return for a larger contribution to the public employee pension funds.
All of this comes as NJBIA released an update to its regional competitiveness report showing New Jersey at the bottom of a seven-state region. As it stands, the state already has the highest income and highest corporate business tax rates compared to Connecticut, Delaware, Maryland, Massachusetts, New York, and Rhode Island.
NJBIA issued swift statements condemning both the proposed millionaires and CBT tax increases and urged the state to get off the tax and spend treadmill. (Read them here and here.) NJBIA President and CEO Michele Siekerka also spoke out on NJTV News right after the Governor’s address.
“Today’s proposal increases New Jersey’s overall budget by 5.7% compared to last fiscal year and 17.9% from FY 2018,” Siekerka said in Tuesday’s statement. “To balance this additional spending, the governor is again looking to place an even greater burden on our already overtaxed residents and job creators whose slim profit margins have been reduced amid costly mandates and onerous regulations.”
The governor’s proposal generally is the same as last year’s. He wants to apply the state’s top income tax rate of 10.75% to all income over $1 million. Right now, the threshold is set at $5 million.
On the corporate tax, Sweeney essentially wants to raise the CBT from 9% to 10% and dedicate the money toward NJ TRANSIT. Currently, the rate is at 10.5%, but that is supposed to be temporary. Unless lawmakers change it, the CBT will revert back to 9% after next year.