Earlier today, Governor Murphy signed the Economic Recovery Act into law. The bill doubles down on corporate business tax incentives, a failed economic development strategy, with a price tag of $14 billion over seven years. In response to the bill signing, New Jersey Policy Perspective releases the following statement.
Brandon McKoy, President, NJPP:
“With a stroke of a pen, New Jersey has chosen to repeat the mistakes of the past by giving away billions of dollars in corporate tax breaks. This is a bloated economic development strategy that has failed to work, not only in New Jersey but in every other state that participates in this costly race to the bottom.
“The reality is, based on a growing body of research, corporate tax breaks of this scale are rarely a good deal for states. They are much more likely to shortchange the Treasury for decades to come. These super-charged programs will leave the state with far fewer resources for a robust recovery. It will also crowd out revenue in future budgets to invest in proven building blocks of a state economy, like education, health care, child care support, mass transit, and job training.
“With this new law, New Jersey continues to be out of step with the rest of the country by digging its heels into a failed economic development strategy. While a number of laudable reforms and innovative incentives are included in the Economic Recovery Act, its size and scope actually surpass that of the expired programs. Simply put, size matters. A $14 billion program is hardly a disciplined and targeted approach to economic development.
“Despite its name, there is little to nothing targeting small businesses and the state’s economic recovery from the ongoing COVID pandemic.
“Instead the ERA mirrors some of the most egregious elements of the previous generation of economic incentives: overly generous tax subsidies for corporations that typically sell them for cash, a program design that favors businesses with the resources to navigate the application process, a deliberate disconnect between the EDA and the annual state budget, and a refusal to entertain the idea of a ceasefire agreement with neighboring states. New Jersey deserves better.”
New Jersey Policy Perspective (NJPP) is a nonpartisan think tank that drives policy change to advance economic, social, and racial justice through evidence-based, independent research, analysis, and advocacy.