The following testimony, on S3218, was delivered to the Senate Budget and Appropriations Committee on December 15, 2020.
Good morning, Chairman Sarlo and members of the Budget and Appropriations Committee. Thank you for this opportunity to provide my testimony on the proposed restructuring of Horizon. My name is Dr. Brittany Holom-Trundy, and I am a senior policy analyst at New Jersey Policy Perspective (NJPP). NJPP is a non-partisan, non-profit research institution that focuses on policies that can improve the lives of low- and middle-income people, strengthen our state’s economy, and enhance the quality of life in New Jersey.
This is one of the most complex pieces of legislation that state lawmakers have considered all year. As you know, the bill would change Horizon’s corporate structure to separate its health insurance operations from other business ventures; it would also give Horizon a tax cut. Because this proposal is crucial to the future of the state, it must be carefully considered in an open and transparent manner. There is no reason to rush the process and doing so would simply invite shortsighted decision-making and regrettable mistakes.
Due to the uncertainty of the bill’s fiscal effects, I have a couple of major concerns.
First, this bill doesn’t provide any information on the fiscal impact of this restructuring on the state. Yes, the $600 million upfront payment may seem enticing, but this is not simply about the lump sum payment. Changes to Horizon’s tax status can lead to significant losses that must be taken into account. For example, we do not yet have a fiscal note on the application of the tax cap law and how this difference, as well as other changes in tax obligations, will impact the funds that the state collects annually. The state is already receiving only a small fraction of the value of the public assets in this deal, and the calculation of the amount owed seems arbitrary at best. Further fiscal analysis of the restructuring by an independent entity is needed.
Additionally, the second part of these funds — the $650 million to be paid over a number of years — are not fully guaranteed, since they can expire under certain conditions. The state is essentially acting, then, as an unsecured general creditor. It is allowing Horizon to change its annual tax obligations for the long term without a backup plan should these funds go unpaid. If we consider this money to be a payment in lieu of taxes (PILOT), then the state should guarantee that the full value of the promised funds will be collected.
Past governors have fallen for the lure of upfront payments to fill budget holes during tough economic times; short-term fixes negatively affect the state’s finances and the state’s credit rating in the long term. We need a fiscal note and independent evaluation of Horizon’s assets and changes to its tax status to understand the full implications of this restructuring.
Lawmakers must consider slowing down this bill to ensure that the state and all New Jerseyans get the best deal possible from any restructuring.
The following testimony, on A4655, was delivered to the Assembly Appropriations Committee on October 26, 2020.
Thank you, Chairman Burzichelli and members of the committee for this opportunity to speak with you today.
My name is Brandon McKoy, I am President of New Jersey Policy Perspective, and I am testifying in support of A4655 to help ensure there is limited police presence at voting locations. The simple fact of that matter is that this year’s elections are incredibly pitched and, as such, have invited significant and drama. Unfortunately, comments and actions by the President and many others at the federal level have telegraphed a serious interest on their part in suppressing the right and ability of citizens to vote. Furthermore, due to excessive police behavior and repeated instances of gross brutality – especially over the course of the past several months and years – the relationship between law enforcement and marginalized communities has eroded significantly. As such, unnecessary police presence at voting locations would at best result in additional stress and anxiety on the part of the voting public as they exercise their rights, and serious suppression and disenfranchisement at worst.
To protect the faith and trust of all people in the voting process, this bill, along with its recent amendments, should receive your support and be passed out of committee.
As New Jerseyans, we don’t need to look very far for instances where police presence at polling locations suppressed the vote. The 1981 gubernatorial election is infamous for the manner in which off-duty officers were sent to predominantly Black and Hispanic areas to intimidate voters. Such a terrible occurrence will forever be a stain on our history, and it represents yet another compelling reason why we must do all we can to prevent a similar scenario from ever happening again. This bill will help ensure such success.
While the President has made awful threats that will likely mobilize some of his supporters to work against basic democratic principles, all of you – as elected officials entrusted to protect the rights and welfare of your constituents and all residents of our great state – have the ability to prevent such terrible outcomes and avoid flirtations with the dangerous and corrupt. Please support A4655 today so that all New Jerseyans can vote with a peaceful mind, not having to worry that they will be targeted simply for exercising their civic duty.
Thank you for continuing to enable remote testimony during these challenging times and for treating the pandemic with the seriousness it deserves while protecting the principles of an open and transparent government. I greatly appreciate your time and consideration, and wish you all a wonderful day.
The following testimony, on A4809, was delivered to the Assembly Commerce and Economic Development Committee on October 21, 2020.
Thank you, Chairman Johnson and members of the committee for this opportunity to speak with you today.
I am testifying in support of A4809 as a technical improvement to the corporate business tax code. This bill should ease the accounting processes for both the state Division of Taxation and tax filers. However, New Jersey Policy Perspective (NJPP) views this legislation as a missed opportunity to close the remaining loopholes in the corporate business tax code. New Jersey successfully enacted combined reporting legislation in 2018, but large corporations continue to utilize tax avoidance schemes, which further erode New Jersey’s corporate business tax revenue and funding for investments that are critically important for the state, especially right now as we chart our recovery from COVID-19.
Given the extraordinary circumstances of a pandemic-induced recession, New Jersey must get a handle on multinational corporations that brazenly exploit tax loopholes. Given New Jersey’s budget restraints, the state is in no position to provide special favors to businesses that need it the least.
Respectfully, I ask members of the committee to consider some major shortcomings of current law that this bill seeks to codify, each a missed opportunity to close tax loopholes, some big enough to drive a truck through.
The “Nexus Isolation” Method
A4809 clarifies that the income from the separate activities of a multi-state corporation will only be taxed if one of a corporation’s members independently has a physical presence in, or nexus with, New Jersey. The “nexus isolation” strategy itself is not consistent with the fundamental conceptual goal of combined reporting, which is to ensure that the tax liability of a corporation to a state is the same regardless of whether it consists of a single member or multiple members. What this bill actually clarifies is how to give those out-of-state corporations an enormous tax loophole worth millions of dollars in foregone revenue. And the bill’s assertion that this method is in line with the United States Supreme Court jurisprudence on the unitary business principle and combined groups implies that another more effective method is unconstitutional. No court has ever found that to be the case.
Deferred Tax Deduction Provision
A4809 also repeals the use of certain credits to reduce deferred tax liability on a corporation’s balance sheet, but does so without a glance at the deferred tax deduction, an accounting adjustment that offsets a “paper” expense like a one-time income tax increase. This little trick protects publicly traded companies from any appearance of depreciation that could impact their stock value, though there is no compelling evidence to support such a claim. It is an unwarranted and unsubstantiated tax giveaway that will eventually cause New Jersey to forgo real revenue needed to fund critical assets and services. In other words, another lost opportunity.
Tax Haven Subsidiaries in Unitary Groups
The combined reporting legislation as proposed in 2018 included the definition of “tax haven” to ensure that a multinational corporation reports subsidiaries that may be used as tax shelters. The final legislation dropped the definition of “tax haven” entirely, which opened up a loophole so large that between $95 million and $233 million flows right through it every year. This bill fails to address that, which is a shame given New Jersey’s precarious fiscal situation.
Small business owners in New Jersey do not have the ability to move taxable income out of the state or country like these large corporations and their well-compensated tax lawyers do. A strong combined reporting statute would level the playing field for all businesses. That can’t happen with a technical clean-up bill. It’s time to make closing loopholes in the existing corporate business tax code a priority.
The following testimony, on A838, was delivered to the Assembly Budget Committee on September 22, 2020.
Good afternoon Chairwoman Pintor Marin and members of the committee. My name is Vineeta Kapahi and I am a policy analyst at New Jersey Policy Perspective (NJPP), a non-partisan, non-profit research institution that focuses on policies affecting low-to-moderate income people in New Jersey. Thank you for the opportunity to submit testimony on this important issue.
NJPP supports A838, which lowers the minimum age limit for the New Jersey Earned Income Tax Credit (NJ EITC) for workers without qualifying children.
The Earned Income Tax Credit (EITC), a refundable tax credit for low- and moderate- income working individuals and families, has long been a successful tool for reducing poverty, promoting economic security, and improving quality of life for working families. By boosting the wages of low paid workers, the EITC helps New Jerseyans better afford their basic needs, improves health and educational outcomes, and strengthens state and local economies.
Due to the EITC’s narrow eligibility requirements, however, far too many New Jersey residents miss out on this important resource. Eligibility for the credit depends on several factors, including income, family type and size, immigration status, and residence. For workers without children at home, eligibility is also tied to age – workers who do not claim children as dependents only qualify for the credit if they are between the ages of 25 and 64.
While EITC eligibility criteria are based on the assumption that workers under 25 are dependent on their parents, the reality is that many young New Jersey workers are financially independent or even support their families. By lowering the minimum EITC eligibility age for workers without qualifying children, the proposed legislation would provide a much-needed boost and stronger foundation for young adults as they begin their careers.
Several other states have recently taken steps to address barriers to the EITC by making targeted changes to eligibility rules. In 2017, for example, Minnesota decreased the minimum age for workers without qualifying children from 25 to 21. In 2018, California expanded its state EITC to childless workers between the ages of 18 and 24, and Maryland eliminated the minimum age requirement for its state EITC altogether.
By passing A838, New Jersey could join states that have expanded the impact of their EITC programs. New Jersey could further strengthen its EITC beyond the present bill through additional measures, including eliminating the upper and lower age caps for workers without qualifying children, increasing the credit amount for childless workers, and extending the credit to ITIN filers. Removing barriers to the EITC would not help households who need support, but would also strengthen the broader New Jersey economy. As recipients of the EITC use the credit to meet short- and medium- term needs, such as transportation, household supplies, and utility bills, expanding eligibility would increase economic activity and support businesses.
In light of the current health and economic crises, it is more important than ever for New Jersey to invest in tools that directly support workers and strengthen the state’s recovery. I urge you to take a step toward eliminating barriers to economic justice by swiftly passing A838.
The following testimony, on the FY 2021 Revised Budget, was delivered to the Senate Budget and Appropriations Committee on September 11, 2020.
Chairman Sarlo and members of the committee. My name is Sheila Reynertson and I am a Senior Policy Analyst at New Jersey Policy Perspective. I am also testifying as a member of the For The Many coalition, which seeks to enhance equity through the tax code and raise adequate revenue to meet the challenges facing the Garden State.
With the initial pandemic outbreak behind us and the likelihood of another outbreak this winter, all signs are pointing to a long, drawn-out economic recovery. Unlike New Jersey’s last recession, low-income workers and small businesses have been hit the hardest by this crisis with cut hours, layoffs, or businesses shutting down entirely. Job losses thought to be temporary are now becoming permanent, which may reduce low-income and middle-class families’ earnings for years to come. This reality must be at the center of the state budget negotiations.
In fact, we implore the legislature to adopt a long-term approach to the state budget this year, to consider not just the immediate 9-month plan but the next fiscal year as well. How New Jersey policymakers respond to the needs of New Jersey families over the next 21 months will have enormous economic consequences for decades to come.
The legislature has a choice: prioritize racial and economic equity by helping New Jerseyans through a tough economic downturn or continue giving away massive tax breaks to wealthy households and millionaires. New Jersey may not be able to control the timing or severity of a second wave of the coronavirus, but policymakers do have tools to prepare and respond more effectively. Here are our top recommendations.
First, protect the state programs needed to meet the demands induced by the pandemic and the economic crisis that is still unfolding. After years of disinvestment and deep cuts, services and programs that support workers, students, children, and families continue to be under- or flat funded. The damage done was far from being fully repaired and then a global public health crisis struck. Legislators must plan for the full impact that has yet to hit the state. If that means borrowing to shore up the surplus, so be it.
Next, raise revenue quickly while making our income tax more progressive. It’s time to think big and bold — and aim high. There is no good reason why earnings between $500,000 and $5 million are taxed at the same rate. By raising the income tax on the wealthiest 5 percent of households, our state budget will no longer be balanced on the backs of working and middle class families.
We recommend adding four brackets to the state’s income tax and increasing rates on the state’s wealthiest households. This would raise more than $1 billion in new revenue each year for education, aid to cities and towns, and property tax relief for struggling households. The tax increase would be paid almost exclusively by New Jersey’s ultra-wealthy, with the top 1 percent – households with average annual incomes of $2.4 million – paying 85 percent.
This tax reform would also make New Jersey’s tax system more equitable, finally undoing the tax code’s upside-down nature, in which low-income and middle-class New Jerseyans have historically paid greater shares of their incomes to state and local taxes than wealthy residents.
To those concerned about losing high earners to another state, consider this: Based on the growth trend of high-income households over the past two decades, there is no reason to treat millionaires like an endangered species. In fact, New Jersey has proven itself to be a healthy and sustainable habitat for them as the state continues to gain millionaire-earning tax filers every year.
Successful corporations have a stake in bringing back New Jersey’s economy. The 2017 Trump tax cuts were a huge giveaway to big corporations and pass-throughs. Given the extraordinary circumstances we are facing, it is vital to make the corporate business tax surcharge permanent as a reliable and sustainable source of needed revenue to ensure a full recovery. We also support the Governor’s proposal of a five percent surcharge on Qualified Business Income for individuals earning over $1 million in income generated by pass-throughs. This would recapture a substantial percentage of a very generous deduction gifted at the federal level. Even with the surcharge, these individuals would still come out ahead.
Finally, we encourage the legislature to take this opportunity to restore fiscal responsibility. Just as our pension obligation is non negotiable, so is our need for sustainable budgeting without resorting to raids of dedicated funds and gimmicky one-time revenue raisers. To get back on track, we must adopt good budgeting practices recognized by credit rating agencies, like prioritizing a healthy surplus and rebuilding the Rainy Day Fund to avoid deep, harmful cuts in the future. States should set aside about 16 percent of total general fund spending for emergencies, according to the Government Finance Officers Association. New Jersey currently has 0 percent in its Rainy Day Fund.
Finally, NJPP thanks the Legislature for enacting a state-level Health Insurance Assessment tax which largely recaptures the recently repealed annual fee on health insurance providers and will support subsidies for New Jerseyans purchasing health insurances. A small percentage of this windfall could also support efforts to make the remaining 80,000 uninsured children in New Jersey eligible for health insurance with the added bonus of $60 million in federal matching funds. We know these kids are at risk for poorer health outcomes and school performance. It’s time to cover all of New Jersey’s kids.
The following testimony, on A4389, was delivered to the Assembly Appropriations Committee on July 27, 2020.
Good morning Chairman Burzichelli and members of the Appropriations Committee. Thank you for this opportunity to provide my testimony on the Health Insurance Assessment. My name is Dr. Brittany Holom, and I am a senior policy analyst at New Jersey Policy Perspective (NJPP). NJPP is a non-partisan, non-profit research institution that focuses on policies that can improve the lives of low- and middle-income people, strengthen our state’s economy, and enhance the quality of life in New Jersey.
New Jersey stands at a critical juncture for our health care system. The full impact of the COVID-19 pandemic is still to be seen, but we know one thing for sure: the virus has taken a historic toll on the families, economy, and future of New Jersey. The measures needed to protect our residents and contain the virus’ outbreak have resulted not only in lost income, but also a lack of insurance coverage, rising distrust in and fear of the health care system, and uncertainty about a vast array of activities for the foreseeable future. This is a moment when New Jerseyans need to see that their leaders are not just reacting to the crisis in the short term, but are committed to protecting them in the long term.
In order to maintain the state’s vital services and build a system better able to handle these crises going forward, we need to be creative. The proposed Health Insurance Assessment (HIA) provides a golden opportunity to do just that. With the federal government giving up this source of income, New Jersey has the chance to absorb those funds without having to introduce changes to current fees.
This is why NJPP strongly supports the proposed legislation to collect an assessment on certain health insurance providers and direct those resources toward making health coverage more affordable and accessible. We understand the need for revenue to not only support current programs, but also to support new initiatives to ensure that New Jersey’s health care landscape is more equitable.
The legislation’s dedication of funds to health care gives New Jersey long-term resources to keep health care affordable. Estimates of a state HIA’s revenue come in just above $300 million. This revenue can be put toward initiatives that provide subsidies to our low- and moderately-paid working families, create more affordable coverage opportunities for our most vulnerable populations, support the reinsurance program, help small businesses with the costs of care, and much more. This is more than a simple cut of costs — this is an investment in a sustainable and affordable health care system for New Jersey’s residents for the future.
This is New Jersey’s moment to make that investment. The federal fee expires after December 31st of this year. This means that, by establishing a state fee now, we are maintaining a system that already exists and are not introducing a new fee for health insurance providers. Only by establishing the fee this year do we have the opportunity to capture this revenue without seeing an increase in rates from the previous year.
Some groups may argue that this would raise rates. This is simply not true. New Jersey would be replacing an existing fee — not introducing a new one — and, because that money is being invested back in the health care system, the state would be committing to sustainable decreases in rates. Further, by supporting increases in enrollment and improving the health insurance risk pool, the state would be directly aiding in cost decreases for New Jersey residents. In other words, this is not a one-and-done situation; rates would not just decrease for one year before increasing again. Instead, measures would support lower rates in the long term.
Again, the opportunity to establish this source of revenue and commit funds to affordability is only available this year. If we let this fee expire without replacing it, the actions needed to build this revenue in later years will face significant obstacles, and residents will be faced with greater instability in their health insurance options. Leaders need to show that they are willing to invest in their residents’ future, because if the COVID-19 pandemic has not been a strong enough lesson on the necessity for that investment, then it is clear that nothing ever will be.
Tim Bartik of the Upjohn Institute testifying at the Senate Select Committee on Economic Growth Strategies on Thursday, September 5, 2019 (Screenshot courtesy of NJTV News)
Earlier today the Senate Select Committee on Economic Growth Strategies heard testimony from national experts on economic development best practices and potential reforms to New Jersey’s corporate subsidy programs. In response to today’s hearing, New Jersey Policy Perspective (NJPP) releases the following statement.
BRANDON McKOY, PRESIDENT, NEW JERSEY POLICY PERSPECTIVE:
“Today’s testimony confirms what NJPP and critics of the state’s corporate subsidy programs have been saying for years: New Jersey must rein in and reform its tax credit programs with hard caps and stronger oversight. The testimony from national experts also calls into question the overall merit of corporate subsidies, as these tax credits are not nearly as beneficial to the state’s economy as many have claimed.
“Continuing to provide tax incentives to already profitable corporations is a wasteful pursuit that damages the state’s finances and fails to benefit the public good. New Jersey would be far better served by investing in its workforce and crumbling public assets.
“This is a watershed moment in the ongoing debate over the future of New Jersey’s corporate subsidy programs, as national experts agree that the status quo is ineffective, costly, and unsustainable. Today’s hearing provides lawmakers with a strong framework to reform the state’s approach to economic development. They owe it to taxpayers to get it right.”
Yesterday, the New Jersey Senate and Assembly unveiled their FY 2020 budget proposal. The spending plan totals $38.8 billion, $200 million more than Governor Murphy’s budget, but does not include enough new, sustainable sources of revenue like the millionaires tax to support those investments in the long-term. In response to the Legislature’s proposal, NJPP releases the following statement.
BRANDON McKOY, PRESIDENT, NEW JERSEY POLICY PERSPECTIVE:
“The budget proposed by the Legislature is an important, but incomplete, step in building an economy that works for all New Jerseyans. This proposal makes important investments in areas proven to lift working families like NJ Transit, property tax relief, health care, and public education. However, these new investments are not backed by sustainable sources of revenue, threatening their long-term viability and the well-being of New Jersey’s low-paid and middle-class families and children.
“This budget, like many before it, does not include the reliable revenue and savings necessary to meet the state’s long-term needs. By depending on rosy revenue projections and canceling a deposit in the state’s empty rainy day fund, the Legislature has doubled down on short-sighted fiscal practices and dismissed the warnings of budget experts and ratings agencies alike. New Jersey is woefully unprepared for the next economic downturn and the state’s window to build up a healthy rainy day fund is rapidly closing. This is a missed opportunity to bolster the state’s reserves and protect New Jersey families, workers, and businesses from the next recession.
“Lawmakers should have learned by now that new investments must be paired with reliable sources of revenue. The fact remains that after eight years of tax cuts under the previous administration, New Jersey is a national outlier in that it still collects less revenue than it did prior to the Great Recession. Without restoring proper tax rates on wealthy residents, the state will continue to put its long term economic growth — and its chances of closing enormous economic and racial inequities — at risk.”
NJPP President Brandon McKoy delivering testimony to the Assembly Commerce and Economic Development Committee on Thursday, June 13, 2019.
This testimony on A4730 and A5343, proposals to extend New Jersey’s corporate subsidy programs, was delivered to the Assembly Commerce and Economic Development Committee on Thursday, June 13, 2019.
Good morning Chairman Johnson and members of the committee. My name is Brandon McKoy and I am the President of New Jersey Policy Perspective. I appreciate this opportunity to testify on this very important issue.
New Jersey Policy Perspective has researched and analyzed the state’s economic development programs for over twenty years. We closely monitor the tax credits awarded by the state Economic Development Authority, how many jobs created and maintained the state gets in return, and we regularly compare New Jersey’s corporate subsidy programs — and the laws that guide them — against those in other states across the nation.
These decades of research and analysis bring us to a simple conclusion: New Jersey’s economic development programs have been improperly designed, poorly measured, and insufficiently examined since the implementation of the 2013 Economic Opportunity Act, which I will heretofore refer to as the 2013 EOA. While the Economic Development Authority in and of itself is not a problematic entity, the legislation guiding its operations leaves much to be desired.
Since the passage of the 2013 EOA, New Jersey’s corporate tax subsidies have risen to unprecedented levels, with an enormous financial reward to very few corporations and an enormous cost to Garden State taxpayers. New Jersey is now a national outlier for how much it spends on corporate subsidies and how little it receives as a return on investment. But it doesn’t have to be this way. As the current laws guiding the state’s corporate subsidy programs are set to expire on June 30, this legislative body has an incredible opportunity to revamp the state’s approach to economic development so it benefits businesses, their workers, and taxpayers alike.
The purported goals of the legislation being considered today may have good intentions, but they lack the critical reforms necessary to get New Jersey’s economic development strategy back on track. It is NJPP’s position that the extensive flaws in the 2013 EOA must be addressed before any consideration of extending these programs.
While bill A4730 would slightly improve eligibility requirements for the Grow New Jersey Assistance Program, it lacks key reforms that would reel in an out-of-control corporate tax subsidy initiative. It contains no annual spending caps, no mandated reporting to verify outcomes, no recurring evaluation process, no annual forecasting or multi-year cost projections, and no labor protections. In fact, this legislation rewards corporations that hire contract workers.
Meanwhile, A5343 would simply extend the existing program to January 31, 2020. For a program with well-documented flaws that is projected to rob the state budget over $1 billion in revenue annually for the foreseeable future, this makes little sense. Rational and attainable fixes have been suggested time and time again to this legislature, both by NJPP and national experts, and yet they remain conspicuously absent from both of these proposals.
Before considering extensions, we must recognize that these programs have not produced results as intended. The cost to the state remains too great, and the means to verify impact remain insufficient.
Before 2013, New Jersey’s corporate subsidy spending was in line with the national average, at about $16,000 per job created or maintained. Since the passage of the 2013 EOA, the state has awarded enormous corporate subsidies that are more than five times the national average. In return, the state has received little verifiable performance or uptick in jobs, development, and economic growth. Simply put, rather than being another tool in the toolbox of economic development, corporate tax subsidies became theeconomic development strategy of New Jersey.
For years, NJPP has raised the alarm about the enormous cost of these programs to our state, at a time when New Jersey can least afford to gamble away future tax revenue. These bills proposed today do not sufficiently assuage the concerns we have documented.
And you don’t have to just take my word for it. Other than the findings of multiple reviews and analyses by other independent actors, the Fiscal Impact Statement that accompanied the final version of the 2013 EOA clearly states that the loss of revenue to the state’s Treasury, due to credit redemptions, would be enormous. It also says that the levels of Corporate Business Tax uncertainty and losses, even with implied increased local spending and jobs development, could be substantial and result in a decade of direct business tax revenue reductions and losses. While some would like to deny the reality, those warnings have come to fruition.
Without implementing annual spending caps for awards, shorter term lengths for awards, penalties for bad actors and known tax dodgers, wage protections for workers, and nationally recognized best practices for assessment and review, New Jersey Policy Perspective cannot support these bills as currently constructed.
I understand that this body and the legislature are on a short time line with regard to the sunset of the 2013 EOA, but NJPP and others have been commenting on these issues to lawmakers for years. None of this should come as a surprise to anyone.
Given the scope and cost of New Jersey’s corporate subsidies, the laws guiding the Economic Development Authority will be among the most consequential pieces of legislation passed this session. Passage of any extension without the inclusion of critically necessary reforms leaves the state extremely vulnerable to uncertain and insufficient economic outcomes.
This presents you an incredible opportunity to fix the problems with New Jersey’s existing corporate subsidy programs and ensure future economic development benefits all New Jerseyans — business owners, their workers, local communities, and taxpayers alike.
Thank you again for this opportunity to testify. I look forward to working with you all as New Jersey revamps its approach to economic development.
Governor Murphy announcing a corporate subsidy reform package in Cherry Hill on June 5, 2019.
Earlier today, Governor Phil Murphy unveiled a package of reforms to New Jersey’s corporate tax incentive programs. The proposals follow months of independent reports and task force hearings highlighting fraud and waste at the state Economic Development Authority. In response to the proposed reforms, New Jersey Policy Perspective releases the following statement.
BRANDON McKOY, NEW JERSEY POLICY PERSPECTIVE PRESIDENT:
“The tax subsidy reforms proposed by Governor Murphy are necessary to correct the serious flaws in New Jersey’s economic development programs. Since the passage of the Economic Opportunity Act in 2013, New Jersey has been a national outlier in how it operates its tax incentive programs, with the state spending five times the national average on corporate subsidies. With the programs guiding the Economic Development Authority set to expire at the end of the month, there has never been a more opportune time for meaningful reform.
“This package of reforms is forward thinking and, more importantly, follows best practices from across the nation. Hard caps on awards and stronger oversight will protect taxpayers and the state’s budget, while better targeting of awards and improved labor protections will ensure the benefits of corporate subsidies are shared broadly among business owners, their workers, and local communities alike.
“We look forward to working with Governor Murphy and members of the Legislature in the pursuit of economic development policies that are fiscally responsible and prioritize the best interests of everyday New Jerseyans.”
New Jersey Policy Perspective (NJPP) is a nonpartisan think tank that drives policy change to advance economic justice and prosperity for all New Jerseyans through evidence-based, independent research, analysis and advocacy. NJPP has long-advocated for reforming New Jersey’s corporate subsidy programs.
