Following a Senate Select Committee hearing on NJ TRANSIT on Friday, Senate President Stephen Sweeney proposed establishing a 1% tax on corporate income in New Jersey to provide a permanent source of funding for the state’s rail and bus system.

Sweeney said he is seeking to permanently set the corporate business tax rate at 10% for businesses with income over $1 million, the second highest rate in the nation. The set rate would supplant a 2.5% surcharge on the corporation business tax, which was scheduled to phase out in 2022.

Sweeney’s plan calls for the constitutional dedication of $300 million a year from the Corporation Business Tax, $125 million from the New Jersey Turnpike, and $75 million from the Clean Energy Fund to NJ TRANSIT.

It would also place an outright ban on capital-to-operating transfers from state funding sources like the gas tax and sales tax, and put a hard cap on similar transfers from federal funds.

“The absence of consistent funding for NJ TRANSIT operations has undermined its ability to provide safe and reliable service,” Sweeney said. “Dedicated funding will help prevent the diversion of resources needed to improve basic services so the agency can bring an end to the breakdowns, delays and service failures that have plagued the system far too long.

“The uncertainty leaves an agency that requires stable funding at the mercy of fiscal conditions and political circumstances that can easily fluctuate. This has been a long-standing problem that needs a long-term solution.”

NJBIA President and CEO Michele Siekerka issued a statement following Sweeney’s announcement, declaring that the association supports the concept of responsibly dedicating funds to infrastructure and the priority of making improvements at NJ TRANSIT, but not at the cost of more taxes on New Jersey’s beleaguered businesses.

“While we understand the need to prioritize improvements at NJ TRANSIT, today’s call for a permanent increase on New Jersey’s corporate business tax is very discouraging and it will greatly impact our largest employers who have already provided historic revenue to the state over the past year,” Siekerka said.

“More disappointingly, our policymakers continue to only target solutions to our challenges through more taxation and spending, rather than the comprehensive reforms we have been calling for.

“That we continue to seek to bring more tax burden to our businesses and residents during a time of dramatic revenue over-performance, and not act on proposed reforms to fix what is fiscally and structurally broken in New Jersey, is confounding. These reforms need to get done. We cannot tax ourselves out of these challenges.”

Gov. Phil Murphy’s proposed FY2021 state budget will be announced on Tuesday. It will include an as yet-to-be determined subsidy to NJ TRANSIT. Last month, Murphy declared that will be no new rate hikes for NJ TRANSIT riders.

Sweeney comprised a legislative panel to study NJ TRANSIT’s issues. Earlier in the day, Sweeney and Senate Majority Leader Loretta Weinberg challenged NJ TRANSIT CEO Kevin Corbett for not bringing the agency’s senior management team to appear for questioning, as they had requested.

9 responses to “Senate President Proposes Business Tax Hike to Fund NJ TRANSIT”

  1. Ken Bozak says:

    What else is new….tax and spend as usual.

    • Melody Singer says:

      These guys keep on getting re-elected. You can only assume that we love high taxes and can’t get enough.

  2. Paul says:

    HOW ABOUT GETTING RID OF THE WASTE RATHER THAN USING THE KNEE JERK REACTION AND TAXING ALREADY OVERTAXED ORGANIZATIONS. YOU GUYS REALLY DON’T GET IT! WHEN IN DOUBT, JUST TAX CORPORATIONS AND SEE HOW LONG IT IS BEFORE THEY GO OUT OF BUSINESS OR LEAVE NEW JERSEY!

    WAKE UP TRENTON!

  3. Melody Singer says:

    Sweeney does not go far enough. We need to raise the gas tax by another 50 cents, raise each personal income tax bracket by 3% and assess a user tax of $500 per year on each car a person owns. Why stop there? Let’s raise the sales tax to 8%, and add a property tax surcharge based on square footage.

    Sound insane? Yup. Can’t wait to leave this cesspool.

  4. Harry says:

    Have these legislators ever heard of the term fiscally prudent? They sure line how to waste and then spend other people’s money. Very sad.

  5. Jim says:

    The Democrats want to tax businesses because the businesses look like the ‘bad guy’ when raising prices to pay for the tax. Then the Democrats say businesses are making too much money because prices are so high. It is the redirection of finger pointing that they are really good at. This indirect way of taxation allows the Democrats to say that they did all this stuff while not raising taxes on the voters, but they really did through businesses.

    Lastly, why do businesses have to support the transit system infrastructure? Again, the reason is that voters will be pissed off that their fares (ie tax) is going up.

    All businesses need to start communicating this ploy to consumers directly to counter these Democrats. Business need to start advertising the percentage of the sale that goes to NJ taxes.

    This state is doomed.

  6. Thomas W. says:

    Government knows only how to spend. It’s as though they don’t appreciate reassessing spending programs; to evaluate if programs are using their funds (our tax dollars) efficiently.

    When’s the last time we’ve read of a program being audited and analyzed for value? Or the last time we’ve heard a program was eliminated without funds being shifted elsewhere. By the time this current process is complete. New Jersey will have the highest marginal corporate tax rate in the country. Sad commentary for the politicians who profess they’re looking out for our best interests.

  7. Stewart Linder says:

    What is the percentage of NJ workers working in the State who use NJ Transit? I would think this would help those leaving the State to work in NY or PA more.

  8. Barbara Kincaid says:

    I agree with every comment made on this site. Maybe as was mentioned before, each department needs to be audited to find the waste, instead of automatically taxing corporations that make over $1 million. There are a lot of small businesses that fall under that category that this so called permanent tax is going to affect. And they wonder why no new businesses are wanting to do business in New Jersey? Wake up Trenton!