Friday Facts and Figures: June 7, 2019

Friday Facts and Figures is a brief digital newsletter focusing on data points from NJPP reports, research, and policy debates in New Jersey and beyond.
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$26 Million

The New Jersey Economic Development Authority (EDA) has put a hold on Holtec International’s next tax credit payment of $26 million after the company was caught providing false information in its application to the state. In 2014, Holtec was awarded the second largest tax subsidy in state history — $260 million over ten years, or a whopping $650,000 per job — for moving its headquarters to Camden. Last month, WYNC reported that Holtec’s CEO falsely claimed the company was never barred from doing business with a state or federal agency in a sworn certification within their application to the EDA. Turns out, Holtec was barred from doing any federal business for 60 days in 2010 and had to pay a $2 million fine to the Tennessee Valley Authority. [WNYC / Nancy Solomon and Jeff Pillets]


5

Governor Murphy has unveiled the details of his plan to reform the state’s corporate tax incentives. Spoiler: they’re really good. The governor’s reform package would create five new tax subsidy programs and ensure awards are capped, better targeted to growing industries, and have stronger oversight mechanisms. The proposal also includes robust labor protections so the benefits of development are shared broadly with workers and local communities alike. According to NJPP President Brandon McKoy, the reforms follow best practices from across the nation and would “correct the serious flaws in New Jersey’s economic development programs.” The current tax subsidy programs are set to expire at the end of month unless they are renewed or replaced. [NJ.com / Brent Johnson and Ted Sherman]


Less Than One-Twentieth

The nonpartisan Congressional Research Service has released a damning analysis of the 2017 Trump tax cuts, finding they produced less than one-twentieth of the economic growth needed to pay for themselves. The report also found the tax cuts had “virtually no effect” on wages, failed to spur investment, and provided no meaningful tax cut to the average working family. Instead, the tax cuts primarily benefited corporations and “high-income individuals who are less likely to spend.” Translation: trickle-down economic policies do not work, and the nation’s wealthiest families are doing incredibly well at the expense of everyone else. This feels like a good time to mention that New Jersey’s top earners would still receive a net tax cut when combining the effects of the 2017 tax cuts and the proposed millionaires tax. [Los Angeles Times / Michael Hiltzik]


$91 Billion

Another new analysis of the Trump tax cuts, this time by Oxford Economics, found that corporations paid $91 billion less in federal taxes in 2018 than they did the year before — a direct result of changes to the federal tax code. In 2018, the Treasury not only collected less corporate tax revenue than in years past, but it also refunded corporations way more than it had in previous years. When combining the lower tax rate and higher refunds, corporations paid an effective tax rate of 7 percent, the lowest rate recorded since 1947. The last time Treasury collections were this low was in 2011 when the nation was still recovering from the Great Recession. [Yahoo Finance / Kristin Myers]


3

New Jersey is one of only three states with zero dollars in its rainy day fund, according to a new report by The Pew Charitable Trusts. This is a big red flag for the state’s fiscal future, as rainy day funds are necessary to cushion the impact of an economic downturn or natural disaster — the only alternatives are cutting essential programs or raising taxes. This underscores the importance of generating sustainable sources of revenue, like the millionaires tax, even when tax revenue is coming in higher than projected. Lawmakers must understand that a millionaires tax is about much more than this year’s budget; it’s about setting a strong budget foundation after almost a decade of austerity. It’s worth noting the Pew report also found New Jersey actually spends less money now than it did before the Great Recession, so remember that the next time someone tells you the state has a spending problem. [NJ Spotlight / John Reitmeyer]


ICYMI

In non-budget news, NJPP President Brandon McKoy argues that the PennEast pipeline has no part in New Jersey’s clean energy future in an op-ed in NJ Spotlight. Brandon brings hard facts to the pipeline debate and pushes back on many unsubstantiated claims made by PennEast and its supporters. “We already have more gas than we need,” writes McKoy. “Moreover, we must use less gas to reduce harmful emissions and meet our goals of combating climate change.” [NJ Spotlight / Brandon McKoy]


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