New Jersey is in the thick of its annual state budget season when taxes are centerstage and our business community hears the familiar inane cliché that “businesses should pay their fair share.” Progressives are using this annoying, inaccurate refrain to criticize Gov. Phil Murphy’s plans for no new taxes and to allow the temporary corporate business tax (CBT) surtax to sunset at the end of 2023.
First, thank you to Governor Murphy for doing the right thing by proposing no new taxes in the FY24 state budget and letting the temporary CBT surtax sunset as it is supposed to per current law. But what exactly do his critics mean that a business should pay its “fair share?” New Jersey businesses pay the highest CBT rate (11.5%) in the nation and will pay the fourth highest when the 2.5% surcharge sunsets. Is that not paying their “fair share?” And New Jersey businesses pay the most property taxes in the nation. Is that not their “fair share?”
NJBIA talks about affordability and competitiveness, and while these are both important and do overlap, they are not the same. New Jersey is both less affordable and less competitive than it should be for businesses, but the “fair share” folks are too focused on only a limited view of affordability and miss the boat entirely on competitiveness.
These critics think that if a business is succeeding, it can, therefore, afford a tax increase without harming other businesses or the economy. This ignores the fact that some businesses may not be enjoying the same level of success and a tax increase could make the state unaffordable for them. More importantly, this flawed thinking ignores competitiveness altogether.
A business has options on where to locate and expand, and regardless of whether it can afford a tax hike, it is keenly aware of the tax policies in different states when making these decisions. Taxes are not the only factor considered, but they are certainly an important one. Ignoring that reality is to the detriment of job creation, wage increases and economic development.
If New Jersey businesses do not already pay their “fair share” with the highest corporate tax rate in the nation and highest property taxes in the nation, then does anyone? And does that mythical figure really exist as anything more than a progressive talking point?
We should be happy that some successful businesses might be able to afford a tax increase, but that does not mean it won’t hurt our state’s competitiveness when other states don’t impose that same cost. Let’s pass a state budget this year without any new taxes and without extending the CBT surtax so that we make New Jersey businesses more competitive.
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