Great news emerged from NJBIA’s Public Policy Forum this week as Senate Budget Chair Paul Sarlo said New Jersey must allow its extended corporate business tax surcharge to sunset at the end of 2023.
But NJBIA President and CEO Michele Siekerka said in order for New Jersey to better compete, more needs to be done to improve the state’s highest-in-the-nation CBT rate.
“The (CBT) sunset will be welcome and we will cheer to the mountains to see that happen — but that must be step one,” said Siekerka, who co-moderated the Legislative Leaders panel with NJ101.5 news anchor Eric Scott.
Siekerka explained to the panel that Pennsylvania has cut its corporate tax rate by 1% effective in January and is on a path to gradually reduce the rate to 4.99% by 2031. And Connecticut, she said, is also “getting on the bandwagon, as are other states in the nation.”
New Jersey’s 11.5% CBT rate is, by far, the highest in the nation. Even if New Jersey allows its CBT surcharge to sunset and returns to a 9% CBT rate in 2024, the Garden State will be at a competitive disadvantage to its neighbor, Siekerka said.
Assembly Speaker Craig Coughlin did not speak specifically to the CBT surtax but did say it should be “reexamined.”
“I think we need to continue to look to find a way to reexamine the corporate business tax, going into the next budget and recognize the business community is still the backbone of the economy here in New Jersey,” Coughlin said.
Senate Minority Leader Steve Oroho said Senate Republicans would prefer repealing the CBT surcharge immediately as part of a tax restructuring plan.
“Get rid of the surcharge,” Oroho said. “I think we could do that right away now that our revenues are actually doing better. That would send a big signal.”
Also this week, Assemblyman Gerry Scharfenberger and Assemblywoman Victoria Flynn, who attended NJBIA’s Public Policy Forum, introduced legislation (A-4907) that would get rid of the 2.5% surcharge, while also reducing the CBT rate to 7.5%.
NJBIA’s annual Public Policy Forum, held on Tuesday in Woodbridge, held many discussions on affordability based on NJBIA’s 64th annual Business Outlook Survey, released the day before.
In that survey, only 5% said Gov. Phil Murphy and the Legislature were doing enough to address business affordability.
When asked what steps they could be taking to improve affordability for business, most (19%) said reduce the corporate business tax.