spot_img

New Jersey’s business surtax expected to sunset

Date:

spot_img

(The Center Square) — New Jersey lawmakers are expected to allow the state’s 2.5% corporate business surcharge to lapse at the year’s end, drawing praise from business groups but criticism from progressives.

A budget plan being considered by New Jersey lawmakers would allow the tax — which levies a 2.5% surcharge on net profits above $1 million — to expire at the end of the year. State finance officials said the expiration of the tax is expected to cost New Jersey more than $322.5 million in the next fiscal year.

The corporate business surcharge was implemented in 2018 in response to a 14-point federal tax cut from the Jobs and Tax Cut Act signed by then-President Donald Trump. The surcharge was meant to be temporary, but Murphy and lawmakers agreed to extend it several times during the COVID-19 pandemic.

The tax is set to sunset this December, absent another legislative extension. If that happens, New Jersey’s corporate tax rate will drop from 11.5% to 9% beginning next year.

Murphy, who was reelected to a second term on a pledge to cut taxes, has been among the most vocal proponents of sunsetting the tax surcharge as part of a broader agenda to shake the state’s high-tax reputation.

“Ending this temporary surcharge is simply one way we compete for the world’s leading companies and make New Jersey the place where entrepreneurs will want to come to start new ones,” Murphy said during his February budget address to lawmakers.

State business leaders have for years cited the need to lower taxes to prevent an exodus of businesses and workers fleeing for lower tax states.

New Jersey lost an estimated 6,000 residents between July 2021 and July 2022, according to U.S. Census Bureau data.

A recent report by the Tax Foundation, found that New Jersey’s 11.5% top marginal corporate tax rate is the highest in the nation for the upcoming tax year.

The New Jersey Business and Industry Association said the state is a “negative outlier in costs and affordability” with the highest corporate tax rate in the nation.

Progressive groups have urged New Jersey leaders to maintain the surcharge, arguing that the tax cut would impact the state’s budget and mean less money for safety-net programs and services.

“Low and moderate-income families are struggling to make ends meet,” Antoinette Miles, political director of New Jersey Working Families, said in recent remarks opposing the end of the tax. “Sunsetting the corporate business tax and undermining our current and future progress as a state would be a mistake.”

Meanwhile, lawmakers are also considering legislation that seeks to make New Jersey’s corporate tax policies more competitive with other states by changing how global intangible low-taxed income and net operating losses are treated under state law.

Murphy and Democratic legislative leaders last week agreed to a deal on senior property-tax relief that includes a $250 increase in “Anchor” benefits for senior homeowners and renters, among other provisions.

Read the Black Chronicle Black History Edition for Free! Click Below

Read the Black Chronicle Black History Edition for Free! Click Below

spot_img
spot_img

Subscribe

Share post:

Popular

More like this
Related

Washington taxpayers to pay more for school meals as program expands

(The Center Square) – More school districts across Washington...

Lee signs bill to allow Super Bowl contracts to remain hidden 10 years

(The Center Square) – Tennessee Gov. Bill Lee signed...

Moody’s upgrades Illinois’ credit outlook

(The Center Square) – A financial transparency expert is...

City of San Francisco gets better rent deal as downtown flounders

(The Center Square) - The city of San Francisco’s...