(The Center Square) — New Jersey Gov. Phil Murphy’s proposed transit tax would give the state the highest corporate tax burden in the nation, according to a new report by a fiscal watchdog group, which calls on lawmakers to reject the plan.
The New Jersey Business and Industry Association report lists 40 reasons why the proposed transit tax is “bad policy” for New Jersey, topping with a claim that it would effectively impose a 20% corporate tax increase on the state’s job creators.
Among other impacts, it would give New Jersey the highest corporate tax rate in the nation (#4); siphon away money needed to pay for reinvestment and innovation (#10) and impact supply chains and local businesses as larger companies cut spending to pay the tax (#19). There would also be downstream effects on sectors ranging from utilities to community groups, according to the report’s authors.
Meanwhile, companies impacted by the new tax would likely pass on the cost to consumers for their products and services, “making New Jersey less affordable,” the group said.
Last but not least, the group notes that the state’s largest companies employ a workforce that makes middle-class wages. “If those wages shrink, so does the middle class,” the group wrote.
Murphy’s $55.9 billion budget, which is being negotiated by House and Senate leaders, includes a proposed Corporate Transit Fee, which would set a new 2.5% tax on an estimated 600 New Jersey businesses making over $10 million a year in profit.
The new tax would replace the state’s now-lapsed corporate business surcharge – which levies a 2.5% surcharge on net profits above $1 million – which expired at the end of December.
The surcharge was implemented in 2018 in response to a 14-point federal tax cut from the Jobs and Tax Cut Act. The surcharge was meant to be temporary, but Murphy agreed to extend it several times during the COVID-19 pandemic.
“The depths of impacts of this tax will hit our largest job creators hard, and well beyond,” NJBIA President and CEO Michele Siekerka said in a statement. “It’s critical that the public at large, the media and most importantly, the Legislature, understand the full ramifications of this unfair tax increase.”
Siekerka said as budget negotiations continue in Trenton, “it’s crucial that our lawmakers and legislative leadership have a full understanding of the consequences of this tax, which has been relayed to us in no uncertain terms directly by our impacted companies.”
“We are calling on our legislators to look closely at these impacts and determine how this tax addresses New Jersey’s affordability issues, how more jobs will be created by it and how our state budget issues will benefit from depressing our economic activity,” he said.
The New Jersey Chamber of Commerce is leading a coalition opposing Murphy’s proposed budget, which they said in a recent letter to lawmakers will “damage New Jersey’s business climate, undermine the state’s corporate recruiting and retention efforts, and jeopardize good-paying jobs.”
New Jersey lost an estimated 6,000 residents between July 2021 and July 2022, according to U.S. Census Bureau data.
