Tax Cuts For Rich Corporations In NJ? More Protests As Budget Nears

NEW JERSEY — Some of the nation’s richest businesses may get a big "tax cut" in New Jersey if the state walks back a controversial corporate surcharge. And if you’re a working family struggling to pay rent and put food on the table, it should get your blood boiling, activists say.

As the state’s elected officials gear up for another budget season, several advocacy groups continue to raise an outcry over proposals to slash the corporate business tax in New Jersey – which is the highest in the U.S. at 9 percent.

The current controversy revolves around an additional 2.5 percent “surcharge” tax on corporate profits exceeding $1 million, which pro-business groups have been fighting to kill since it was rolled out in 2018, the year after Gov. Phil Murphy was first elected. The surcharge tax – which puts the overall corporate tax rate at 11.5 percent – was originally scheduled for step downs in 2020 and 2021. Instead, it was extended by the state Legislature in 2020, and won't sunset until Jan. 1, 2024. However, Murphy and other high-ranking Democratic lawmakers have recently shown signs that they’re willing to let it expire.

The surcharge tax – which is estimated to bring the state at least $600 million annually – doesn’t target “mom and pop” shops, activists have pointed out. Instead, it comes out of the pockets of the top 2 percent of the wealthiest companies operating in the state, including corporations like Amazon and Walmart, which rake in massive profits in New Jersey but aren’t headquartered here. See Related: Amazon Officially Passes Up Newark (And NJ) For New Headquarters

“The wealthiest 2 percent of businesses should be paying more, not getting a tax cut when everyday New Jerseyans are struggling,” the Newark-based New Jersey Institute for Social Justice recently tweeted.

It’s a stance that activists with Make the Road New Jersey echoed when they marched in Perth Amboy last weekend, demanding that Murphy and other officials renew the corporate tax surcharge.

“While working families struggle to pay for rent and food every month, multi-billion dollar corporations like Amazon are reporting record profits,” said Rodney Salas, a member of the group.

Salas said that he and his neighbors are facing soaring rents in cities like Elizabeth, Passaic and Perth Amboy, as well as others across New Jersey. And it’s puzzling why lawmakers would give some of the richest companies in the world a massive tax break when people are literally losing the roofs above their heads, he added.

“It’s time to invest in housing, schools and working families – not to give tax cuts to billionaire corporations like Amazon in the FY2024 budget,” Salas said.

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Other New Jersey officials and pundits have argued in favor of dropping the state’s corporate tax surcharge, however.

Some Republicans, such as Assemblyman Christopher DePhillips (District 40), have been blasting New Jersey’s “highest-in-the-nation” corporate tax rate, with DePhillips recently pushing for a bill that would lower the rate to an overall 2.5 percent. Another proposed bill would temporarily reduce the corporate business tax to 7.5 percent and remove the 2.5 percent surcharge.

Even a simple reduction of the surcharge would be a big victory for businesses in the Garden State, according to the New Jersey Business and Industry Association.

“While signs appear that New Jersey will let its 2.5 percent Corporation Business Tax surcharge sunset at the end of this year, there are even more indications why it’s a good idea for the state to lower it beyond that,” the group recently wrote.

“There is great need and want for structural reform when it comes to New Jersey’s CBT,” said NJBIA Chief Government Affairs Officer Christopher Emigholz. “With the overall highest business tax burden in the nation and other states reducing their CBT, New Jersey should be looking at reducing that rate even more to remain competitive.”

But advocates say industry groups are playing a game of smoke and mirrors when it comes to taxing big businesses in New Jersey.

Last month, more than two dozen social justice groups sent a letter to Gov. Phil Murphy, Senate President Nicholas Scutari, Assembly Speaker Craig Coughlin and members of the Senate and Assembly Budget Committees. Their demand? Keep the juice running on the state’s corporate business tax surcharge.

“We keep hearing about kitchen-table issues and middle-class New Jerseyans,” their letter reads. “How will corporate tax cuts help them?”

• See Related: NJ Needs To Keep Its 'Corporate Millionaire's Tax,' Activists Urge
• See Related: NJ Advocates Worry That Huge Corporate Tax Cuts May Be Around The Bend
• See Related: New Jersey's Corporate Tax Rate Is Highest In The Nation, Report Says

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