N.J. Lawmakers: Corporate Tax Loophole Robs $200M from State

From the Star-Ledger, January 28, 2016:

State Senate Democrats made a renewed push Thursday for a bill to close corporate tax loopholes in New Jersey that died in the last legislative session.

New Jersey collects about $2.6 billion a year in corporate business taxes, but it’s estimated the state could reap another $200 million by enacting “combined reporting” to counteract businesses that operate across state lines and shift profits to states with lower or no corporate income taxes to lower their tax liability here.

In a combined reporting system, New Jersey would grab its share of the income based on the corporation’s activity in the Garden State.

The New Jersey Business Tax Reform Act, adopted in 2002, installed some laws designed to stop firms from avoiding taxes, such as dropping the tax deduction for royalties and interest paid to related companies. But other loopholes exist, left-leaning think tank New Jersey Policy Perspective said.

About two dozen states already mandate combined reporting. And according to NJPP, New Jersey already requires combined reporting for casinos.

“There is no better evidence of the benign economic development impact of combined reporting than the continued willingness of major multi-state corporations to maintain operations in combined reporting states,” said Sheila Reynertson, a policy analyst at NJPP.

The vast majority, 92 of 98, of New Jersey’s largest employers are also located in at least one state that has combined reporting. Fifteen operate in every combined reporting state, NJPP said in a new report.