Dear Member of the New Jersey Legislature:
As you continue negotiations on a budget for FY19, National Taxpayers Union (NTU) and our members across New Jersey urge you to adhere to fiscal responsibility and refrain from imposing additional burdens on families and businesses. Of particular concern is the recent compromise struck between the Senate and Assembly to drastically hike taxes on job creators in the state. We urge you to reject this misguided proposal.
The proposed plan would raise the corporate tax rate from 9 percent to 11.5 percent on income over $1 million and 13 percent on income over $25 million. If the top marginal rate of 13 percent is adopted, New Jersey would have the highest corporate income tax rate in the United States, a dubious title to hold. Compared to its neighbors, the rate would be significantly higher than Pennsylvania and double that of New York’s.
New Jersey ranks last on the Tax Foundation’s State Business Tax Climate Index, which ranks each state by their overall competitiveness and business-friendliness. A higher rate will only solidify New Jersey’s standing as the worst state for business. A low corporate tax rate spurs business activity and attracts capital investment from around the world; which expands job opportunities, improves productivity, and boosts take home pay for workers from all income levels. However, since capital is extremely mobile, a higher rate could result in some businesses moving to low-tax jurisdictions.
Proponents argue this proposal is necessary to claw back some of the benefit businesses have gained from the federal Tax Cuts and Jobs Act, which lowered the corporate rate from 35 percent to a more productive 21 percent. Because of a lowered rate, businesses have responded by announcing bonuses for hundreds of thousands of New Jersey workers, pay raises, 401(k) increases, and expansions in the state. Unfortunately, a 44 percent increase to the marginal rate will undermine the pro-growth changes made under federal tax reform.
New Jersey faces challenging economic times, mainly due to the high tax burden on businesses and families. Rather than enact legislation that makes the state less competitive, lawmakers should embark on reforms to the state’s tax code to attract capital, residents, and businesses back to the Garden State.
Taxpayers are counting on you to pass a fiscally responsible budget without raising taxes or adding to the state’s mounting debt problem. NTU looks forward to working with you to ensure a prosperous future for New Jersey and its taxpayers.
Sincerely,
Thomas Aiello
Policy and Government Affairs Associate