It’s not clear where state Senate President Nick Scutari and Assembly Speaker Craig Coughlin stand on the issue of letting the Corporate Business Tax surcharge sunset this year. That is, it’s unclear if they will want to extend the 2.5% increase to help pay for certain items (such as a reduction in property taxes for seniors) or simply to help balance the budget, which has increased by a buck or two since Gov. Phil Murphy took office.
Neither Scutari (D-Clark) nor Coughlin (D-Woodbridge) has given a definitive statement, and that’s OK. It’s budget season. Everything, as they say, is on the table.
One thing is clear: Now that revenues are down, many politicians apparently are weighing whether the state should maintain its 11.5% CBT — by far the highest in the country. From big-town mayors to legislators, the idea clearly is being floated.
The reason they often cite is that the state needs a certain or reliable source of funding for things such as New Jersey Transit or property tax relief — or any number of other things they want, but can’t fund.
Not surprisingly, New Jersey Chamber of Commerce CEO Tom Bracken scoffs at the idea of the CBT being categorized as a reliable source of funding.
“If they do this, that’s not a reliable source of funding,” Bracken said. “These companies are going to start leaving, right, and that source of funding is going to drop like a rock. So, you’re going to hurt the state longer-term.
“It’s not going to be a reliable source of funding. It’s going to do the exact opposite — it will decrease the source of funding, which means it ultimately is going to hurt many more programs in the long term than it will help in the short term.”
Of course, those who feel all business owners and corporations are greedy (and millionaires) won’t be moved by this argument.
Perhaps they will be by this one: We need to keep our word.
It’s the argument that Gov. Phil Murphy has made for years about making a full pension payment. And, if you sign on for that, you need to sign on for keeping our word about letting the CBT surcharge sunset (you know, after already extending it once).
The biggest proponent of this argument is Murphy himself.
In the keynote address at the state chamber’s ReNew Jersey Business Summit in March, Murphy made his feelings clear.
“Temporary does not mean ‘permanent until otherwise noted,’ it means temporary,” he told the crowd of business leaders.
Bracken said keeping this promise is important in a state that prides itself on straight talk.
“More than anything, this is a reputational thing,” he said. “If the legislative leaders back off on a commitment they made, it is going to be very difficult for companies looking to come here to believe in anything that these elected officials say.”
Of course, doing this is as easy as simply calling a news conference — or not. Extending the CBT surcharge would require passing a piece of legislation that Murphy would have to sign.
Bracken, who often has sparred with the governor, is hopeful that he and Murphy are on the same team for this one.
“Murphy has been pretty adamant about letting this happen,” Bracken said. “And, to his credit, he’s doing it for the reasons I’ve advocated, which is keeping our word.”
As for that reliable revenue source: Bracken said it’s time for elected officials to study what he views as Economics 101.
“The only reliable source of funding we can possibly have is growing the business community,” he said. “Creating more jobs, generating more income tax and the spending that those jobs would create, is the only reliable source of funding you can ever possibly have.
“Doing things like extending the sunset of the CBT only is going to reduce that ability.”