Despite pleadings from advocacy groups and campaign promises from politicians, the 2.5% surcharge to the Corporate Business Tax in New Jersey officially sunset Thursday, when no last-minute action was taken by the Legislature during its last session of the year.
Efforts to extend it — for a second time — likely would not have gone far.
Much to the delight of the business community, Gov. Phil Murphy repeatedly has said the tax should sunset.
To be sure, allowing the surcharge to sunset — which is different than a tax “cut” — does not necessarily make New Jersey a business-tax friendly state.
In 2024, New Jersey still will have the fourth-highest CBT rate in the country at 9%. Only Minnesota, Illinois and Alaska are higher.
Tom Bracken, the head of the New Jersey Chamber of Commerce and obviously a huge proponent of letting the surcharge expire, obviously is pleased.
“New Jersey’s employer community is pleased Gov. Murphy and the Legislature allowed the state’s ‘temporary’ 2.5% Corporate Business Tax surcharge to expire this year,” he said. “As we’ve stated before, honoring this commitment sends a strong message to our existing businesses — and those looking to move here — that New Jersey’s leaders understand the importance of growing the economy.”
The surcharge was originally enacted shortly after Murphy took office in 2018 — when it was argued that extra revenue was needed. It was extended during COVID, when it again was argued that extra money was needed — despite the billions that came in aid from the federal government.
Some who have argued the state should maintain the surcharge have said it should be used to fund the revenue shortfall at New Jersey Transit. Jersey City Mayor Steve Fulop, a declared gubernatorial candidate, has stated this as his position.
Those in favor of allowing the surcharge to sunset have said NJ Transit needs to find its own funding source. Others point out that New Jersey remains one of the few states that is making the business community replenish the Unemployment Insurance fund rather than using federal dollars in pandemic relief to do so, as most others have.
Murphy, throughout the year, has repeatedly stood firm on the idea of allowing the CBT surcharge to sunset, essentially saying, “A deal is a deal.”
And at a Nov. 28 event sponsored by the New Jersey Business & Industry Association, state Sen. Paul Sarlo (D-Wood-Ridge) and Assemblywoman Eliana Pintor Marin (D-Newark), the budget chairs in their respective legislative houses, shared a similar view.
Sarlo specifically said a CBT surcharge should not be used to fund NJ Transit.
All of this was well-received by Bracken.
“Our New Year’s wish is for Gov. Murphy and the Legislature to continue prioritizing policies that allow our companies to expand and add jobs,” he said. “A strong economy led by business is the only way to create organic, reliable and sustainable new state revenue to combat future budget challenges.”