TRENTON, N.J. – Pennsylvania’s corporate tax cut must be a catalyst for change in New Jersey, says Assemblyman Christopher DePhillips. The lawmaker is calling on legislative leadership to prioritize his bill to lower New Jersey’s highest-in-the-nation 11.5% corporate business tax rate before companies, jobs and families move to the Keystone State.
“Prior to this tax cut, Pennsylvania’s corporate tax rate was not that far off from New Jersey’s. If we want to remain at least somewhat competitive with our neighbors, we absolutely must act with a sense of urgency to cut taxes. If we don’t, executives, businesses, jobs and families in New Jersey will simply cross the Delaware to set up shop,” DePhillips (R-Bergen) said. “The more we continue to drive these businesses and these corporations out of the state, the more we are going to hurt regular families.”
Pennsylvania lawmakers recently voted to lower the state’s 9.99% corporate tax rate, the second highest in the nation, by 1% on Jan. 1. The tax will gradually reduce to 4.99% by 2031.
DePhillips sponsors two bills in the Assembly to lower the New Jersey corporate business tax from 11.5% to 2.5% – matching North Carolina’s lowest-in-the-nation rate. Under the first bill (A1146), businesses earning over $100,000 that are subject to the highest tax rate, would have their rate reduced gradually to 2.5% in four years. Businesses earning less than $100,000 would get to the 2.5% rate in two years. Another bill (A1152) would cut the tax to 2.5% for all businesses immediately and apply retroactively to Jan. 1, 2020.
“The business community knows that Democrats in Trenton are addicted to taxing and spending. Democrats cemented their bad business reputation when they passed the additional 2.5% corporate surcharge in 2018 and then added insult to injury by extending it in 2020. The extra revenue is not worth the fall out,” DePhillips added.
The 2.5% CBT surcharge was levied on businesses earning over $1 million in 2018. It was originally scheduled to phase down to 10.5% in 2020 and back to 9% in 2021. Instead, it was extended by the Legislature in 2020 and will not sunset until Jan. 1, 2024.
DePhillips, who was sworn into the General Assembly in 2018, introduced a bill (A5152) in 2019 to immediately eliminate surcharge. It never moved.
“Pennsylvania is taking advantage of New Jersey’s progressive political agenda that is only putting us behind economically. We can’t look in the rear view mirror and ask, ‘What happened?’ We know what’s wrong and Republicans have legislation to fix it now. We need to cut taxes. It’s really that easy,” DePhillips said.
After North Carolina’s tax code was reformed to lower the corporate income tax to 2.5 percent, 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 has ranked last in the nation for its business climate each year since 2016. The state’s nation-high property tax burden, 11.5% corporate income tax rate, individual income tax structure and inheritance tax are among the reasons businesses do not choose New Jersey. The New Jersey Business and Industry Association also puts the state at the bottom in a business cost analysis among neighboring states including Massachusetts, Connecticut, New York, Pennsylvania, Maryland and Delaware. For the fourth year in a row, New Jersey topped United Van Lines mover’s study for having the highest outbound migration.