Politics & Government Tax Corporations, Fund Trains: Shoving Match Intensifies In New Jersey Should New Jersey raise taxes on the state’s most profitable businesses to fund public transportation? Here are the arguments on both sides.
A proposal would roll out a 2.5 percent tax on businesses that earn more than $10 million per year in New Jersey. It would create a regular funding source for NJ Transit. Above, a supporter of the plan takes part in an action on June 25. (Photo courtesy of For The Many NJ)
NEW JERSEY — Should New Jersey raise taxes on the state’s most profitable corporations to fund public transportation? It’s a question that is creating some serious controversy in the Garden State – and which may see a landmark decision soon.
A debate has been raging about a proposal that would roll out a “new” 2.5 percent tax on businesses that earn more than $10 million per year in New Jersey. It would create a regular funding source of roughly $1 billion per year for the cash-strapped NJ Transit, which is rolling out a 15 percent fare hike to cover a sprawling shortfall. Supporters of the tax hike say that only the largest corporations in the state would be impacted – many of which don’t even have a headquarters in New Jersey. But critics argue that the tax will lead to job losses if big businesses decide to pack up their bags and leave.
Gov. Phil Murphy – who announced the plan during his budget address earlier this year – has reportedly reached an agreement on it with state lawmakers ahead of the June 30 budget deadline. But advocates on both sides aren’t letting up their full court presses in the meanwhile.
SUPPORTERS: MAKE THEM ‘PAY THEIR FAIR SHARE’ On Tuesday, a coalition of social justice groups continued their push in support of the proposal, rallying alongside members of the Amalgamated Transit Union, which represents nearly 10,000 active and retired transit workers (watch the video online here).
Transit workers paid a visit to three major train stations – Newark Penn, New Brunswick and MetroPark in Iselin – bringing a message to commuters during the morning rush hours: “It’s time for corporations to pay their fair share in New Jersey.” “If this funding is not passed and signed into law, make no mistake about it: service will be cut and routes will be eliminated,” asserted Veronica Cobb, president of ATU Local 819.
“Riders will have longer commutes and workers may lose their jobs,” Cobb added. That viewpoint was echoed by Avelino Nazario, a bus rider from Passaic who is a member of Make the Road New Jersey. “Wealthy corporations that reap billions in profit should not get a tax break while working people like me see our fares go up,” Nazario insisted. “New Jersey could have a world class transit system if our legislators prioritized it in the budget, and they really should,” said Alex Ambrose, a policy analyst at New Jersey Policy Perspective and the author of a report on the economic and climate benefits of NJ Transit. “Public transit is one of the best investments a state can make, benefitting millions of riders, businesses, the economy and the environment,” Ambrose said.
Other supporters of the tax hike for corporations include more than 50 New Jersey mayors and other elected officials, who recently urged Murphy and state lawmakers to “ensure that wealthy corporations pay what they owe.” “While our towns and cities grapple with increasing costs and budget constraints, it is imperative that we address the issue of corporate tax breaks that further strain our resources, public infrastructure and ability to meet the needs of our residents,” their letter states. See Related: Tax Big Corporations To Fund NJ Transit, Mayors Say In Letter To Murphy Essex County Commissioner Brendan Gill also recently supported the corporate transit fee, saying that working class families are unfairly burdened when train fares go up. “Our working families deserve reliable and affordable service, but don’t deserve to shoulder this entire burden,” Gill said. “The Corporate Transit Fee will affect only the 600 wealthiest corporations, and only taxes profits above $10 million. We can avoid these catastrophic impacts to our public transit simply by asking our wealthiest corporations to pay their fair share.” A recent Fairleigh Dickinson poll found that 54 percent of New Jersey residents would support restoring a corporate tax surcharge and dedicating the revenues to NJ Transit. About 29 percent of respondents said they would not support it.
Advocates have pointed out that while Murphy and lawmakers appear to have reached a deal, no budget bill is available and no votes have been cast. “It’s taken a growing movement to get us here and we’re not going to slow down until this is signed into law,” pledged Eric Benson, campaign director of For The Many NJ. ICYMI: At Newark Penn Station today, as labor leaders, transit workers, and community allies rally in support of the Corporate Transit Fee. It’s time to fully fund @NJTRANSIT and ensure reliable, affordable public transit for all New Jerseyans.https://t.co/G9wxQUnJOk
— For the Many NJ (@ForTheManyNJ) June 25, 2024 CRITICS: ‘SUPPORT BUSINESSES, DON’T STIFLE THEM’
Other New Jersey residents, lawmakers and advocates aren’t so thrilled about the plan to raise corporate taxes, however. “It’s embarrassing that Democrats have increased state spending by 62 percent in just six years but can’t make NJ Transit work efficiently without budget gimmicks,” Assemblyman Chris DePhillips said.
The assemblyman argued that the tax plan will create an “undue burden” on businesses during an already-challenging economic era. “Our businesses are the backbone of our economy,” said DePhillips (NJ-40), adding that he is also against hiking fares for NJ Transit riders – but that there’s no reason to choose one burden over another. “Imposing additional taxes on them is counterproductive to our efforts to foster economic growth and job creation,” DePhillips said. “We need to support our businesses, not stifle them.” The New Jersey Business and Industry Association (NJBIA) has also been bashing the proposal, recently releasing a video and an infographic that list reasons to shoot down the tax. The NJBIA said the number of Fortune 500 companies headquartered in New Jersey has decreased from 22 in 2018 to 14 in 2024.
“This statistic alone should cause our policymakers to second guess their actions in considering a tax increase on the exact type of employers that create the exact jobs we need in New Jersey – those that pay a middle level income wage and then some,” president and CEO Michele Siekerka said. “Obviously, there are businesses doing quite well in New Jersey, which we are grateful for,” Siekerka continued. “And just as obvious, there are also more companies reducing their workforce who are not featured in this video. But the bottom line is the contemplated tax policies of Gov. Murphy and legislative leaders will not improve this situation. In fact, it is the polar opposite of supporting a competitive and affordable business climate.” See Related: NJ Town’s Commerce Chamber Criticizes Proposed Business Tax Hike Curtis Bashaw, a Republican candidate for U.S. Senate in New Jersey who is running to succeed embattled Sen. Bob Menendez, has also lined up on the side of critics of the tax. “Legislative leaders should reject a $1 billion corporate transit tax on businesses, which would give the Garden State the highest corporate tax in the nation and continue to make New Jersey more expensive,” he argued. HOW DID WE GET HERE?
The latest effort to fund NJ Transit has roots in the state’s corporate business surtax, which sunset earlier this year after seeing multiple extensions. New Jersey has a 9 percent tax on corporations – one of the highest in the nation – with companies earning less than $1 million taxed on a sliding scale. The state previously charged an extra 2.5 percent “surtax” for companies that top $1 million in earnings. On Jan. 1, the surtax expired as originally planned. However, advocacy groups in New Jersey have been calling for the state to revive the controversial tax, arguing that it could be used to bridge a huge, looming funding gap at NJ Transit – and keep more money in riders’ pockets. It now looks like lawmakers are leaning towards bringing back the CBT surcharge – in a slightly watered-down form. See Related: Tax Increase Deal Struck Between Murphy And Lawmakers, Report Says