Every June brings uncertainty to Trenton as we wait to see how the budget will be balanced. The battle is always whether there will be cuts to spending or increases to taxes and fees. Depending on your views and experience, you are sure to have a position. As a statewide business organization, the Commerce and Industry Association of New Jersey (CIANJ), works with the men and women who take the risks every day of operating a business and who employ many of our residents. We believe tax increases are detrimental and will have far-reaching negative impacts on our state.
Unfortunately, Trenton is focusing on raising taxes. One proposal calls for a 3 percent increase in the Corporate Business Tax (CBT). The rate will jump from 9 percent to 12 percent for the 2,400 companies earning more than $1 million annually. Another proposal would change the rules around how the CBT is calculated and reported. The changes are being considered despite testimony from representatives from the Office of Legislative Service and the State Treasurer, that revenues from the CBT have been declining in recent months.
The rules surrounding how the CBT is calculated and reported are complex. But make no mistake, a reason for the decline in revenue is the shrinking number of companies that pay the CBT. In other words, New Jersey has been losing large corporations to other states because of our business tax structure – think Mercedes Benz. So why focus on the CBT to balance the budget? It is antithetical to think that more money would be raised from a tax, when its revenue is already shrinking. The opposite is more probable — revenues will further decline.
All this undoubtedly factors into New Jersey’s reputation as being unfriendly to business. Some reports estimate New Jersey may have lost as much as $25 billion over the last decade because of companies and residents leaving the state. Tax dollars are leaving New Jersey. With companies like Amazon at our door, with a potential to bring 50,000 private sector jobs, does it make sense to change the CBT?
New Jersey has amazing resources – a highly educated and skilled workforce, an ideal location and access to mass transit, major seaports, airports, and highways – so why thwart future investment by making it harder to do business in New Jersey?
Another tax being proposed is a millionaire’s tax. This tax would affect 17,000, many of whom are corporate executives and business owners, who are in the top 1% of income earned and already provide 40% of the state’s income tax revenue. This tax would also negatively impact businesses in the Garden State.
CIANJ and its members urge Governor Murphy and members of the Legislature to just say no to higher taxes. Focus on spending cuts and attracting new investment. Increase the number of entities who pay the taxes by building partnerships with industry and by rolling out the welcome mat to new investment, innovation and the entrepreneurial spirit that has historically made New Jersey the birthplace for great innovations in technology and business. We want to see our economy thrive, not wilt. We want to expand our existing businesses and recruit new players to the state – those two things cannot be done if the tax burden is placed squarely on the backs of New Jersey’s business community.