Many phenomena follow the path of least resistance: water flows downhill; what goes up comes down; and hot objects eventually cool. Capital is no different. In a free market with healthy competition, capital investments and job creation choose the path easiest to navigate.
Removing a rock blocking a stream easily gets water flowing in the right direction again, but fixing a stalled state economy is a lot more complex. Clearing the boulders that block the path to a prosperous state economy, and the free-flowing capital it needs, is a much bigger task. However, the New Jersey Economic Recovery Act of 2020, a massive new tax incentive program supported by NJBIA that was recently signed into law, will help do just that.
The challenges that block economic progress in New Jersey are well-entrenched: a multitude of regulatory burdens, the struggle some employers face finding skilled workers, the lack of a cohesive innovation ecosystem, aging infrastructure, and of course, high costs. You could argue the new tax incentive law will help businesses by addressing each of these, but primarily it makes projects affordable that otherwise would not be. In short, while the high cost of doing business in New Jersey often blocks the flow of capital to the Garden State, the new Economic Recovery Act will help fill financing gaps and drive the flow of investment back to us.
If New Jersey had lower taxes, less regulation, cheaper labor, and more affordable housing and office space than competing states, tax incentives might be unnecessary. But realistically, we know that the most densely populated state in the nation located in the older, more costly Northeast will never be inexpensive. Don’t get me wrong – NJBIA is constantly fighting for reforms that will make New Jersey more competitive and affordable, but when the rocks blocking the path are boulders, tax incentives for businesses are more important than ever.
New Jersey businesses need the extra boost that the Economic Recovery Act of 2020 will provide, especially since the Garden State spent a year and a half without any comprehensive business incentives after the old programs expired. Most importantly, the broad scope of the new law is designed to ensure that when new capital starts flowing again, it’s not just a trickle.
The Emerge program within the new tax incentive package will provide tax credits per job created or retained. The Aspire program will support new building, and the Community Anchored Development program will spur the right kind of community development that will attract growth to New Jersey.
Our innovation ecosystem is now set up for success with the governor’s signature Innovation Evergreen Act, the Ignite program, the expansion of the existing Angel Investor Tax Credit and net operating loss programs, and the overall focus on innovation and manufacturing. Other programs will help capital flow into New Jersey again by expanding the film tax credit, lifting up food deserts, and supporting Brownfields restoration and historic property reinvestment.
NJBIA thanks Gov. Phil Murphy and the Legislature for understanding that our state economy needed this lift. We hope our policymakers refrain from putting new obstacles, costs and burdens before business. Let the Economic Recovery Act of 2020 work the way it was designed by removing the burdens and letting capital, jobs and development start flowing like water to New Jersey, instead of being diverted to Pennsylvania, New York, and other competitor states.
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