Ask state Sen. Michael Testa what’s holding back New Jersey’s economy, and he’ll give you one answer: the corporate business tax.
Ask his Democratic colleague from South Jersey, Sen. John Burzichelli, and you’ll get the same answer, with a catch.
The two shared a stage recently at the Southern New Jersey Development Council’s 44th annual Sound Off for South Jersey legislative conference at The Westin Mount Laurel.
On the CBT, they agreed on the problem. Where they split was on how New Jersey could afford to fix it.
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Testa (R-Vineland), co-chair of the Legislature’s manufacturing caucus, said he knows he sounds like a broken record. He doesn’t care.
“The corporate business tax is at 11.5 percent, which isn’t something that New Jersey should be proud of at all,” he said. “We are bleeding businesses out of our state.”
He ticked off examples: Samsung, Mars and Burlington. He said Johnson & Johnson is investing $2 billion in a manufacturing plant in North Carolina and more than $1 billion in Pennsylvania.
Next door, he noted, Gov. Josh Shapiro is cutting Pennsylvania’s corporate tax rate to 4.99% by 2031.
Testa said he expects the counterargument: Cutting the tax costs the state revenue. He has an answer for that.
“I would argue we’re going to lose even larger streams of revenue when they leave,” he said.
He came back to it later, asked what he’d change in this year’s budget, and added a few more numbers. New Jersey has been rated the worst state to do business in, he said.
“For those that haven’t been paying attention, there’s only 50 states,” he said. “So we’re dead last.”
He also took aim at the transit surcharge tied to the CBT, which South Jersey businesses pay with little service to show for it. Testa calls it “taxation without representation.” https://binje.com/featured/op-ed-why-south-jersey-deserves-dedicated-share-of-its-corporate-transit-fee-contributions/
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Burzichelli (D-Paulsboro) didn’t argue.
“Of course, it should be lower,” he said. “Ideally, there should be no tax.”
There’s just one problem with that, he said,the state runs on that money and the current tax structure isn’t helping.
In order to bring the rate down, Burzichelli said the state would have to make drastic cuts or find other sources of revenue.
“It is a struggle,” he said.
Both senators serve on the Senate Budget and Appropriations Committee. Burzichelli said there’s less room to move than people think. Once you take out school funding, a $7 billion pension payment and other obligations, only a small slice of the budget is truly up for negotiation.
“Government will deliver what people ask government to deliver,” he said. “When people ask less of government, government will cost less.”
Burzichelli also said New Jersey, Pennsylvania and Delaware are stuck in an incentives race that only escalates. His fix would be to get the three governors in one room for an afternoon to work out a regional strategy.
It’s been tried, he said. The governors met once, in Cherry Hill. There was never a second meeting.
