New Jersey Policy Perspective president Gordon MacInnes submitted the following written testimony in favor of A-2007, which would enhance the state’s tax expenditure reporting requirements. It was released by the Assembly Appropriations Committee this afternoon and will move to the full Assembly for a vote.
As New Jersey’s economy continues its sluggish recovery from the Great Recession, there’s one thing all New Jerseyans and elected officials of all parties can agree on: the state needs to create jobs.
However, the job-creation strategy that is currently favored by state officials – using tax credits and similar mechanisms to spur economic development – has a dubious track record and does not even always produce a net positive benefit to the state giving the subsidy.
With the volume of tax credit deals vastly increasing in New Jersey in the past few years – over $1.5 billion approved since Governor Christie took office – it’s important that we keep a close eye on this alternative form of spending, known as a tax expenditure, in order to confirm that it is succeeding in its goal(s).
That’s why New Jersey Policy Perspective fully supports A-2007, which would strengthen the state’s tax expenditure reporting, evaluate tax expenditures with the same rigor as direct expenditures, and ensure that any particular tax credit program is temporary and does not get “baked in” to the state’s spending and economic development portfolio.
Remember: a “tax credit” is usually just another term for “tax increase.” Someone gets the credit and the rest of us pay more.
New Jersey Policy Perspective has been a leading voice in this area. Our analysis and advocacy, in fact, helped lead the state to adopt the very law that A-2007 would modify. Since then, we’ve continued to examine these policies, always with the same question in mind: Is this a good investment in New Jersey’s future?
More often than not, unfortunately, we’ve found ourselves answering “no.” Adopting this common-sense piece of oversight legislation would be one crucial step towards being able to answer “yes” more often.
Thank you for your time.
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