Another day, another headline about how New Jersey’s tax incentive programs seemingly have been a bad deal for the state.
This one came from the New Jersey Society of Certified Public Accountants. Its poll said 55 percent of CPAs surveyed do not think the Economic Development Authority’s incentive programs have been an effective tool for attracting companies (and jobs) to the state. Only 9 percent, in fact, said they felt the programs were effective.
But do these sentiments match the impact? And do those being polled truly understand how the programs work?
That may be the bigger question. One no poll or study can provide an accurate answer to.
“It’s the type of misinformation that makes my head explode,” said someone who — not surprisingly — feels incentives have been a good thing.
And, who — not surprisingly — does not want to go on record.
The record, however, may speak for itself.
The majority of those responding to the CPA poll (54 percent) said New Jersey’s tax incentive programs should focus on a balance of large and small/midsize companies, while 32 percent believed that the focus should be primarily on small and midsize businesses.
Both answers seem to indicate that EDA incentives go mostly to larger companies.
The reality: Most of the EDA incentives already do go to small and midsize companies. It’s just that those awards do not get the same publicity as the bigger ones.
And, while the bigger ones were recently criticized by Gov. Phil Murphy, some business leaders said their impact should not be overlooked.
So said Michele Siekerka, head of the New Jersey Business & Industry Association.
“We can’t disregard what has gone on in our inner cities of Newark, Camden as well as Jersey City and how the incentive programs have worked,” she said. “We can’t ignore that.”
Tom Bracken, the head of the New Jersey Chamber of Commerce, offered another angle.
The incentive programs have not been as effective as they could have been — but they haven’t been bad, either.
“Look at the numbers,” he said. “Eleven billion is the dollar amount of tax credits given out or granted, but the amount that was utilized I think was somewhere in the $500-600 million area over 10 years.
“So, were they effective? To be effective, they had to induce job creation and capital investment. And because only $600 million was utilized, obviously the job increases and capital investment didn’t happen, or more of that money would have been utilized.
“It’s strictly a numbers thing. They are not wrong, they are just stating the obvious based on the numbers.”
Numbers are, in fact, the key to any discussion involving tax-incentive programs.
Ralph Thomas, the head of the NJ CPAs group, said taxes — not tax-incentive programs — are the real issue.
“Taxes are clearly a subject that New Jersey residents and business owners feel passionate about,” he said. “The New Jersey Legislature would benefit from listening to CPAs, who are in touch with the business community on a daily basis.”
The same sentiment is shared by Mike McGuinness, the head of the New Jersey chapter of NAIOP.
McGuinness said the poll results did not shock him.
“I’m not terribly surprised to see this,” he said. “I think what they are emphasizing is that incentives can be helpful, but perhaps we should be focusing on the more germane issues that every country deals with, like infrastructure and transportation.”
Siekerka said incentives are desperately needed — no matter what anyone thinks of them.
“The consistent message is that incentives are a part of a toolbox that the state has in order to help attract companies to come here,” she said. “When you look at the states we compete with, you have to be cognizant of the fact that those states have incentive programs, so we need to have programs that are on par with those and use as one tool in the toolbox.”
Read more from ROI-NJ:
- State audit of EDA criticizes tax incentive programs, calls for changes in them and how they are administered
- Angry Murphy says EDA rules must change. Legislative, business leaders agree. Just how is question
- EDA supporters, feeling state audit was overly harsh, fight back