Time to Derail NJ TRANSIT Tax Talk

Report to Members

By Michele N. Siekerka, NJBIA President and CEO On Mar 27, 2024

Just eight weeks after the sun went down on New Jersey’s temporary Corporation Business Tax surcharge, Gov. Phil Murphy broke his pledge by resurrecting the levy under a new name to fund NJ TRANSIT – part of his $56 billion FY25 state budget proposal.

In a stunning reversal of his prior public promises, the governor now wants to raise the top corporate tax rate for this state’s largest job-creators to 11.5% – a move that will saddle New Jersey businesses with the highest corporate taxes in the nation. Again.

What’s more, the “Corporate Transit Fee” as he euphemistically calls it, would be permanent, unlike the temporary Corporate Business Tax surcharge it replaces. The tax also plays havoc with corporate balance sheets, as the new levy would be retroactive to Jan. 1, 2024, when the old 2.5% temporary CBT surcharge expired, instead of July 1 when the FY25 budget begins.

Let me also point out that all this talk of raising taxes comes at the same time as the governor has a $6 billion state budget surplus. 

If the Legislature goes along with this, it will be a major blow to New Jersey’s economic competitiveness. Our neighbors in Pennsylvania are lowering their top corporate tax rate to 4.9% – and simultaneously funding mass transit – without raising business taxes.

In short, the governor is proposing a punitive tax on our largest corporations, many of whom are headquartered in non-urban areas far from commuter train lines. The economic impact of this tax will trickle down and be felt by their employees and smaller companies who do business with them.

And to state the obvious, the governor’s sudden reversal on the surtax is simply bad form. Businesses require the ability to plan to be successful. When public officials make promises that drive investment, and then renege on them a few weeks later, it goes beyond creating terrible policy. 

It either reaffirms that New Jersey is anti-business, or it shows the state really is a fiscal mess, which was only masked by federal dollars indirectly funding shortfalls in the short term.

NJBIA calls on the Legislature to right this wrong. Make our businesses a priority instead of taking advantage of them with tax increases that put them, and the tens of thousands of jobs that they represent, at risk. 

Stop creating unsustainable state budgets and forcing the business community to make up the shortfall for year-after-year irresponsible spending increases. During the budget process, we intend to hold our policymakers accountable to do right by New Jersey businesses. 

To access more business news, visit NJB News Now.

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