Rush to Approve $14 Billion in Corporate Tax Breaks is a Stunning Disappointment

There is broad consensus that subsidizing corporations is an irresponsible and wasteful use of taxpayer dollars, but that isn't stopping New Jersey.

Published on Dec 21, 2020 in Tax and Budget

Earlier today, the New Jersey Senate and Assembly voted to approve more than $14 billion in corporate tax breaks. This vote follows two years of task force hearings and investigative reporting that showed how costly and ineffective the state’s previous corporate tax incentive programs were. The 300-plus page bill, A4/S3295, was made public less than a week ago and was fast-tracked through the Legislature. In response to today’s vote, New Jersey Policy Perspective releases the following statement. 

Brandon McKoy, President, NJPP:

“The rush to approve more than $14 billion in corporate tax breaks is a stunning disappointment, especially at a moment of tremendous suffering and economic uncertainty for so many families. There is broad consensus that subsidizing corporations is an irresponsible and wasteful use of taxpayer dollars, whether it’s research from institutions across the ideological spectrum, independent investigative reporting, or even Governor Murphy’s own tax incentive task force. The bill passed by the Legislature today ignores all of that and instead doubles down on the failed trickle-down policies of the past, with an overall price tag that eclipses that of the infamous 2013 Economic Opportunity Act.

“We acknowledge that this legislation contains important labor protections along with critical provisions for oversight, program assessment, and accountability. Checks and balances are plentiful in this proposal, but the sheer size of it rests on the erroneous assumption that corporate tax subsidies significantly persuade businesses to relocate to New Jersey. The Garden State used to spend approximately $100 million dollars annually on these programs, and comparable states continue to operate at that level. A program of this size goes beyond merely “competing” and represents total fiscal irresponsibility.

“The implementation of this bill bucks the previously stated positions of this administration and is rightly being lampooned by state and national experts alike. In his 2019 State of the State Address, Governor Murphy remarked that it “simply put, is nuts” for the state to forgo more than $1 billion a year in corporate tax subsidies. We agreed with that statement then, and we agree with it now. Over the next several years, New Jersey will be forgoing billions more in revenue while grappling with increased need for education and transit investments, paying back billions in borrowed funds, and maintaining vital services and support for workers, families, and small businesses.

“Now, the same justifications that were used to pass the 2013 Economic Opportunity Act are being used to legitimize this bill. And just as those reasons turned out to be wrong, so will those being used today. The best way to stimulate an economy is by supporting proven sectors of economic growth like education, public transportation, and the development of safe and affordable homes. Expecting investments to trickle down from corporations to communities is a proven failure, a proven waste of taxpayer dollars, and it must end.”

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.
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