TRENTON, N.J. – Assembly Republicans are walking to their talk of cutting the corporate business tax to make the state more business friendly. Assemblymen Christopher DePhillips and John DiMaio are introducing a bill (A3754) with Assemblywoman Serena DiMaso that would gradually cut the rate to a flat 2.5 percent.
“The reason we need a tax incentive program to attract businesses is because taxes are too high,” said DePhillips (R-Bergen). “The simple answer is to lower the rate to a point that makes New Jersey more attractive financially than other states.”
In the first year, the tax rates for businesses earning below $100,000 – subject to the 7.5 percent and 6.5 percent rates – would lower to 3.5 percent and the second year to 2.5 percent and remain there. The top 9 percent rate on income over $100,000 would decrease to 7 percent the first year, 5 percent the second year, 3 percent the third year and 2.5 percent in the fourth year and remain there.
“North Carolina lowered their taxes in 2013 while New Jersey decided to pick winners and losers,” said DiMaio (R-Warren), referring to the Economic Opportunity Act, which reformed New Jersey’s tax incentive programs. “In the years after, North Carolina’s economy boomed and New Jersey was one of the nation’s slowest growing economies. Cutting taxes creates jobs and grows the economy, and that’s what this bill will do.”
After North Carolina’s tax code was reformed – now levying a 2.5 percent corporate income tax – it had the fastest Gross Domestic Product growth and one of the fastest growing populations in the country from the first quarter of 2013 through the third quarter of 2015. New Jersey had one of the slowest rates of economic and population growth over that same period.
“New Jersey is lagging behind our neighbors because we are hindering our businesses with absurd tax levels,” said DiMaso (R-Monmouth). “Corporations generally don’t want to move here because we are considered the worst state to do business. We want to end that bad reputation and this is the first step.”
The Tax Foundation has ranked New Jersey the nation’s worst business climate for five consecutive years. It was ranked 49th in the country in 2013, then became 50th after the Economic Opportunity Act. North Carolina went from the 44th ranked business climate before their tax reforms, to now being ranked the tenth best place to do business nationally.