Controversial NJ Business Tax May Survive If New Bill Becomes Law

NEW JERSEY — A retiring New Jersey assemblyman has breathed new life into an attempt to keep a controversial business tax in place.

An extra surcharge on the state’s corporate business tax (CBT) – which is among the highest in the nation – is set to automatically expire on Jan. 1, 2024 unless it’s extended by new legislation.

New Jersey has a 9 percent tax on businesses, with smaller companies earning less than $1 million taxed on a sliding scale that bottoms out at 6.5 percent. It’s expected to raise a whopping $5 billion during the next fiscal year, making it one of the state’s meatiest sources of revenue.

New Jersey also charges an extra 2.5 percent “surtax” for companies that top $1 million in earnings – the source of the controversy. Read More: Should NJ Keep This Controversial Business Tax? Fierce Debate Rages On

Gov. Phil Murphy and other high-ranking state lawmakers have repeatedly said they plan to let the CBT surcharge expire. However, soon-to-retire Assemblyman Thomas Giblin (D-34) has now introduced a bill that could keep it alive.

Giblin’s bill, A-5878, would maintain the 2.5 percent CBT surtax until Dec. 31, 2025. It would require a certain amount of the revenue to be “dedicated to specific purposes.” Specific language of the bill wasn’t available as of Friday afternoon.

Labor advocates and progressive groups have been pushing for lawmakers to renew the surcharge tax, claiming that the revenue is desperately needed to fund vital state programs in a time of budget uncertainty.

Advocates argue that the surcharge tax only impact the richest corporations in the state and doesn’t apply to the vast majority of “mom and pop shops.”

Spokespeople with the For The Many NJ coalition applauded Giblin’s bill on Friday.

“This bill shows that the Legislature is listening to the many voices across the state saying no to this billion-dollar tax cut for big corporations,” asserted Nicole Rodriguez, president of New Jersey Policy Perspective.

“The surcharge is a highly targeted tax that pays for the essential public services that keep our communities and economy running,” Rodriguez said. “New Jersey needs this revenue to balance its budget and avoid damaging cuts to public transit and programs that working families rely on.”

Liz Glynn, director of organizing at New Jersey Citizen Action, agreed that it’s not a good time to cut taxes for wealthy businesses.

“As corporate profits continue to break records, working and middle-class families in New Jersey continue to struggle to make ends meet,” Glynn said. “The public services they rely on need robust funding, and taxing corporate profits from the world’s biggest companies will help ensure that affordable housing and healthcare, infrastructure, and essential services have sustainable funding into the future.”

Pro-business groups have disputed the claim that allowing the surcharge to expire is a “tax cut” for corporations, arguing that it was always intended to expire.

The New Jersey Business and Industry Association (NJBIA) is among those who are praising Gov. Murphy for standing firm on the plan to let the tax sunset.

“Supporters of extending the CBT surtax either don’t understand or acknowledge the full context of it,” NJBIA president and CEO Michele Siekerka said.

“Firstly, the surtax was always intended as temporary and, as Governor Murphy, has repeatedly stated: ‘A deal is a deal,’” Siekerka said.

“Secondly, as misrepresented by supporters and misreported by some in the media, New Jersey’s corporate business tax is not ‘going away,’” Siekerka continued. “After the temporary 2.5% surtax sunsets, our largest employers will still have a 9% CBT rate – which is the fourth highest in the nation.”

Catch up with some of our recent coverage of the issue below (click headline to read the article):

• NJ Residents Approve Of This Tax Hike, New Poll Says
• Bitter Struggle Over New Jersey Corporate Business Tax Heats Up
• 3 Problems New Jersey Kicked Down The Road With Latest Budget
• NJ Among Worst In Nation For Tax Rate, New Study Says

Send local news tips and correction requests to eric.kiefer@patch.com. Learn more about advertising on Patch here. Find out how to post announcements or events to your local Patch site.