N.J. approves $14 billion in corporate tax breaks

(Eduardo Munoz Alvarez/Getty Images)

By Hanna Park

(TRENTON, N.J.) The New Jersey State Legislature passed a staggering $14 billion bill in corporate tax breaks on Monday, according to The New York Times.

With Gov. Phil Murphy’s approval, the Democrat-led Assembly passed the bill 68-11, while the Democrat-controlled Senate voted 38-1 in favor of the massive bill at breakneck speed.

The tax incentive targets businesses to remain or move to New Jersey, with added safeguards against fraud and impetus for the state to recover from the coronavirus.

The 200-page bill, titled the New Jersey Economic Recovery Act of 2020, was introduced just last Wednesday and passed both houses in less than an hour, after brief mentions of the need to boost the economy ravaged by the pandemic.

According to NYT, it is one of the country’s largest corporate tax incentive packages, arriving just a month after the state borrowed $4.28 billion to seal a pandemic-related budget gap.

Murphy, a progressive Democrat running for re-election next year, opposed similar bills in the past, such as the Economic Opportunity Act of 2013, which offered nearly $7 billion in tax breaks and expired 18 months ago.

But without much notice, state leaders drafted a new bill on Dec. 16, calling for $11.5 billion in tax incentives over seven years. After more than 100 amendments to the bill, the package increased to $14 billion, after an additional $2 billion in tax breaks for the film and television industry.

Businesses and municipal leaders praised the bill as a crucial move to ensure that New Jersey would be secured with incentives once the economy resuscitates. Supporters claim it also creates “evergreen investment” partnerships, which would create funds for small start-up businesses by selling tax credits to established firms.

Meanwhile, critics denounced the state's seven-year program as risky and questioned whether the loss of tax revenue would harm the state's services. While the current bill includes a $1.5 billion annual cap, others argue that the figure is too high to be considered a cap.

“It’s almost meaningless,” Sheila Reynertson, a budget and tax policy analyst with New Jersey Policy Perspective, told NY Times. “It really puts into question: Do we have any stewards of the people’s money in this administration?”

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