Topic Category: Transportation

Corporate Transit Fee Should Only Go to NJ Transit

Posted on by Alex Ambrose

Every day, hundreds of thousands of New Jersey residents rely on NJ Transit to get to work, school, medical appointments, family visits, shop, and dine. But this essential service is under threat as the agency’s operating budget faces a nearly $1 billion budget deficit for FY 2026 — a shortfall that constitutes nearly one-third of its budget. In response, lawmakers stepped up, and Governor Murphy established the Corporate Transit Fee (CTF), marking the first dedicated funding source in NJ Transit in history. To preserve this progress, the FY 2026 budget must ensure that revenue generated through the CTF is used exclusively to fund NJ Transit — its original intent.

Years of chronic underfunding have eroded NJ Transit’s reliability and affordability, culminating in record delays and a 15 percent fare increase in 2024, exacerbating rider dissatisfaction. Worst still, transit riders are more likely to be low-income and not own cars, leaving them particularly vulnerable to service disruptions and fare increases.

As lawmakers deliberate on the FY 2026 state budget, they will inevitably seek additional revenue sources. It will be tempting to raid the CTF for purposes unrelated to transit — a pattern all too familiar in New Jersey. Similar diversions include lawmakers consistently using the Clean Energy Fund and the agency’s own capital fund to plug budget gaps in NJ Transit operations. Yet, the CTF was created precisely to address NJ Transit’s $1 billion funding deficit. Allowing the practice of diversions to continue would undermine NJ Transit’s ability to serve the millions of riders who depend on it.

Historically, lawmakers have filled NJ Transit budget gaps through fare hikes and service cuts, which risks destabilizing the transit agency with a “transit death spiral” — a vicious cycle where reduced ridership leads to less revenue, prompting further cuts and fare increases. Public transit is essential for our state’s economic growth, traffic congestion relief, and meeting our climate goals. Undermining NJ Transit threatens progress on these critical priorities.

This risk can be averted; the CTF offers a solution. Its revenue is more than enough to cover the agency’s shortfall and could reverse the additional 3 percent annual fare hike scheduled for July 2025.

Importantly, the CTF only applies to corporations with net profits exceeding $10 million, representing less than 1 percent of all corporate taxpayers in New Jersey. Moreover, because the tax applies to profits made in New Jersey and not just companies located in the state, more than 4 out of 5 corporations that pay the fee are out-of-state and multinational companies.

The Corporate Transit Fee was created to fund NJ Transit operations and must be used exclusively for that purpose. Dedicated CTF revenue will ensure that NJ Transit can continue to serve as a lifeline for residents and support economic growth. By safeguarding this funding source, lawmakers can secure a more equitable and prosperous future for all New Jerseyans.

New Corporate Transit Fee is a Historic Win for Riders

Posted on by Alex Ambrose

Today, New Jersey lawmakers introduced and advanced legislation (A4704/S3513) that creates a Corporate Transit Fee and dedicates the proceeds to NJ Transit. Sponsored by Senate President Nick Scutari and Assemblywoman Shama Haider, the legislation establishes the first-ever dedicated funding for NJ Transit in the 45-year history of the agency. The 2.5 percent fee on corporations with more than $10 million in profits would primarily be paid by large multinational corporations headquartered out of state. This follows months of education and advocacy from transit riders, unions, local elected officials, and advocates for a fair budget and reliable transit. In response to the bill advancing, New Jersey Policy Perspective (NJPP) issues the following statement.

Alex Ambrose, Policy Analyst, NJPP:

“This is a historic win for riders and the state of New Jersey as a whole. Until now, NJ Transit has never had a dedicated source of funding, and the new fee will help get the agency back on track after decades of disinvestment. For riders, more funding means more reliable service, and fewer delays and cancellations, and no major service cuts.

“No matter how you look at it, this is the textbook definition of good public policy. The state is making a major investment in a public service that millions of people use, with broad economic benefits, and it’s paid for by profitable corporations that can afford it. With riders about to pay higher fares, this fee makes sure that multinational companies like Amazon are also paying for the infrastructure they benefit from.”

“There are countless advocates, riders, local officials, labor leaders, and lawmakers past and present who made this possible. Thank you to Governor Murphy, legislative leadership, and bill sponsors for taking this historic step towards a more sustainable economic future.”

Read NJPP’s report on the need for dedicated funding for NJ Transit.

Read NJPP’s analysis detailing how most companies that would pay the Corporate Transit Fee are headquartered out-of-state.

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Corporate Transit Fee Will Help Get NJ Transit Back on Track

Posted on by Nicole Rodriguez

Today, Politico New Jersey reported that Governor Murphy and legislative leaders have reached a budget deal that includes the proposed Corporate Transit Fee to fund NJ Transit. This would represent the first-ever source of dedicated state funding for the agency, which faces a looming shortfall of nearly $1 billion once federal pandemic aid expires. In response to the newly announced budget deal, New Jersey Policy Perspective (NJPP) releases the following statement.

Nicole Rodriguez, President, NJPP:

“The corporate transit fee included in the budget deal should have riders breathing a sigh of relief. This dedicated funding is a historic first for NJ Transit and will go a long way toward getting the agency out of the red and back on track. Mass transit is a cornerstone of the state’s economy, so it’s only fair to have the most profitable corporations in the world help fund the infrastructure they benefit from. And regardless of what business lobbyists say, this fee will only be paid by ultra-wealthy corporations like Amazon and Walmart, most of which are headquartered out of state.

“While this news is historic, so are the constant delays and cancellations riders have endured over the past week. NJ Transit has been underfunded for decades, and more support from state and federal lawmakers will be needed to upgrade our infrastructure. But make no mistake, this is a huge win for all of the riders, working families, and communities that rely on NJ Transit’s bus and rail service.”

Read NJPP’s analysis detailing which corporations would pay the Corporate Transit Fee.

Read NJPP’s report detailing the history of underfunding at NJ Transit.

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Very Big, Very Few, and Far Away: Majority of Companies That Would Pay the Corporate Transit Fee Are From Out-of-State

Posted on by Peter Chen

New Jersey’s economy relies on NJ Transit to move millions of residents to their jobs, schools, doctor’s appointments, and grocery stores. However, after decades of disinvestment and with federal pandemic aid about to expire, NJ Transit faces a nearly $800 million shortfall, even after the agency approved a 15 percent fare hike earlier this year.[i] To fully cover the budget deficit and get NJ Transit’s finances back on track, Governor Murphy has proposed the first-ever dedicated source of funding for the agency: a Corporate Transit Fee on the biggest and most profitable corporations in the world, the overwhelming majority of which are headquartered outside of New Jersey.[ii]

The proposed Corporate Transit Fee would generate approximately $1 billion in revenue and only apply to corporations with net profits exceeding $10 million, representing less than 1 percent of all corporate taxpayers in New Jersey.[iii] Because the tax applies to profits made in New Jersey and not just companies located in the state, more than 4 out of 5 of the corporations that would pay the fee are out-of-state and multinational companies.

Despite claims from corporate lobbyists that this fee could hurt New Jersey businesses, the state’s recent history suggests otherwise. Over the last six years, the same companies targeted by the 2.5 percent fee were already paying the same tax rate under the now-expired Corporation Business Tax surcharge, and they made record-breaking profits when the surcharge was in effect while tax revenues increased accordingly.

With the future of NJ Transit on the line, the Corporate Transit Fee would save the agency and ensure that the most profitable corporations in the world contribute their fair share to critical infrastructure that provides as many benefits to these companies as it does to the public.

The Corporate Transit Fee Targets the Top 1 Percent of Corporations

The Corporate Transit Fee is highly targeted to the most profitable corporations with the highest ability to pay. Out of more than 116,000 corporate filers in the state, the Corporate Transit Fee would only apply to approximately 600 companies, the top 0.5 percent.[iv] The fee would not apply to New Jersey’s mom-and-pop businesses, or even most of the state’s corporations, as more than 99 percent of corporate filers would not pay it.

With corporate profits skyrocketing and large multinational companies concentrating enormous wealth and power, the Corporate Transit Fee would help level the playing field by making the tax code more progressive. Currently, corporate filers in New Jersey pay the same tax rate whether they have $100,000 in annual profit or more than $100 million.[v] This holds New Jersey’s small, midsize, and even large corporations to the same standard as corporate behemoths like Amazon, Walmart, and Bank of America.

The Majority of Companies That Would Pay Are From Out-of-State

Business lobbyists often portray the Corporate Transit Fee as a tax exclusively on New Jersey companies, but the data tells a different story. Among the roughly 600 corporations that would pay the Corporate Transit Fee, more than 4 out of 5 — 81 percent — are headquartered outside New Jersey.[vi] This is a result of the fee’s design, its high annual profit threshold of $10 million, and broader economic realities like increasing corporate concentration and the proliferation of online shopping.

Like other corporate taxes, the Corporate Transit Fee is based on profits generated in New Jersey, regardless of where a company is headquartered. This means that corporations can be subject to the fee even if they do not have any physical presence in the state or employees working here, undermining the already unsubstantiated claims made by business lobbyists that the fee makes the state less attractive to businesses.

New Jersey will continue to collect corporate tax revenue as long as multinational corporations and out-of-state businesses continue to profit from sales to New Jersey consumers. Whether it’s Amazon delivering packages, Tesla selling vehicles, or Adobe selling Photoshop, the Corporate Transit Fee won’t stop them from doing business in New Jersey.

Corporations Make Record Profits Even With Corporate Taxes

There’s no need to speculate about the potential impact of the Corporate Transit Fee on corporate profits or New Jersey’s business community. Over the last six years, corporate profits and corporate tax collections both skyrocketed in New Jersey with an almost identical tax in place: the 2.5 percent Corporation Business Tax surcharge on corporations with more than $1 million in annual profit. Between 2017 and 2023, corporate tax revenue in New Jersey more than tripled from $1.7 billion to over $5.3 billion.[vii] At the same time, corporate after-tax profits reached record levels.[viii] This evidence shows that a modest and targeted tax on the world’s most profitable corporations does not stop them from making record-breaking profits, nor does it impede state tax collections.

Since 2017, New Jersey’s corporate tax collections have not only been record highs for the state but also far outpaced comparable states in the Northeast and Mid-Atlantic. During that period, New Jersey’s corporate tax collections increased by 310 percent, almost triple that of neighboring Pennsylvania, a state with lower corporate tax rates that business lobbyists often point to in their efforts to lower their own tax obligations.[ix] The suggestion that reducing the corporate tax rate is beneficial to anyone but those corporations is simply unfounded, and New Jersey’s experience with the corporate surcharge shows that large corporations can remain ultra-profitable even while paying a modest tax on their profits.

The Corporate Transit Fee Makes Fiscal and Common Sense

 Requiring the most profitable corporations in the world to help fund the infrastructure they benefit from makes fiscal and common sense. Companies like Amazon, Coca-Cola, and Walmart continue to generate record-breaking profits and can easily afford to pay the Corporate Transit Fee without it hurting their bottom line, and having a reliable mass transit system is in the best interest of riders, the business community, and the broader economy. By targeting very big, very profitable, and mostly out-of-state corporations, the Corporate Transit Fee is a necessary step to save NJ Transit and improve service without once again balancing the agency’s budget on the backs of riders.

 End Notes

[i] New Jersey Transit Board of Directors, Meeting Minutes for March 12, 2024, Exhibit A, FY25 Operating Budget, p. 67426, https://content.njtransit.com/sites/default/files/board/meeting_minutes/2024_03_12_OpenSess.pdf. The budget anticipates $766.8 million in Corporate Transit Fee revenue to cover its shortfall from other revenue sources.

[ii] NJPP analysis of data from New Jersey Department of the Treasury.

[iii] Governor’s Budget in Brief FY25, p. 60.

[iv] NJPP analysis of data from New Jersey Department of the Treasury.

[v] N.J. Stat. 54:10A-5(c)(1). For a plain English explanation, see NJ Division of Taxation, Corporation Business Tax Overview, https://www.nj.gov/treasury/taxation/corp_over.shtml (2023).

[vi] New Jersey Office of Revenue and Economic Analysis review of tax year 2021 business registration data and reported headquarter address.

[vii] NJPP analysis of New Jersey state budgets for fiscal years 2011-25.

[viii] U.S. Bureau of Economic Analysis, Corporate Profits After Tax (without IVA and CCAdj) [CP], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/CP, May 3, 2024.

[ix] NJPP analysis of Federal Reserve state corporate income tax revenue data.

Dedicating Corporate Transit Fee Revenue to NJ Transit Makes Fiscal and Policy Sense

Posted on by Peter Chen

The Corporate Transit Fee is a critical investment for our state — making Big Business pay back some of its record profits in support of the New Jersey infrastructure that generated those profits in the first place.

But it also represents an important bulwark against the tide of eroding corporate taxes that have affected both federal and state governments. An increasingly concentrated group of the most profitable corporations now soak up an enormous percentage of the world’s economic production, with tax cuts and loopholes for corporations to reduce already-shrinking tax liability. If states are unable to pull back wealth from these sophisticated corporate actors, they will find themselves with less revenue to fund critical investments like schools, public health, and infrastructure, while placing more burden on in-state residents and institutions.

As NJPP noted in its recent report, this fee would affect less than 1% of New Jersey business tax filers, almost all of whom are located out of state. Rather than harming New Jersey businesses, this would help level the playing field between small and midsize businesses and corporate behemoths, ensuring that a business collecting $100,000 in profits does not pay the same tax rate as a business collecting $100,000,000.

The prior corporate surtax allowed New Jersey’s tax collections to grow proportionally with the record profits generated by businesses post-2020, while other states lagged behind. The Corporate Transit Fee will hopefully allow this trend to continue.

Dedicating the fee to NJ Transit makes both fiscal and policy sense. As you are well aware, NJ Transit faces an $850 million budget deficit starting in fiscal year 2026. Without the CTF, the trains and buses that form the backbone of New Jersey’s economic success would face immediate cutbacks and cancellations, with shuttered stations and riders left stranded. The most profitable businesses should pay their fair share for infrastructure that helps them generate their profits. NJ Transit needs sustainable dedicated funding to preserve its operations for years to come.

Over 40 Advocacy, Labor, Community, and Local Government Leaders Urge NJ Transit to Stop Double-Digit Fare Increases

Posted on by NJPP Staff

On Friday, leaders from more than 40 organizations and local governments urged NJ Transit to refrain from voting on the agency’s proposal to raise fares by 15 percent in light of the new Corporate Transit Fee proposed by Governor Murphy.

In an open letter to NJ Transit Board Chair Francis O’Connor that was submitted as a public comment to the agency, the diverse group of labor, advocacy, faith, community, and local government leaders called on NJ Transit to reconsider double-digit fare hikes and instead work with Governor Murphy and the Legislature on funding the agency through the state budget.

“When NJ Transit first proposed raising fares in January, the agency faced a $119 million budget shortfall with no guarantee of additional state aid. Since then, Governor Murphy proposed the first-ever dedicated source funding for NJ Transit — a 2.5 percent Corporate Transit Fee on corporations with more than $10 million in net profits — that would provide the agency more than $800 million annually,” the letter states.

The letter states that the proposed fare increases would disproportionately harm low-income families that rely on mass transit, highlighting that more than half of NJ Transit bus riders have an annual income of less than $35,000, and that the state’s Black, Hispanic/Latinx, and Asian residents are the least likely to own a car.

“Raising fares should always be a last resort, not the first solution for an agency facing budget issues,” the letter continues. “A double-digit fare hike proposed mere months before its implementation is not a sustainable solution, nor is it an equitable one. This proposal will disproportionately harm poorer families who rely on transit, serving as a de facto tax for low-income riders, many of whom are already on strict budgets.”

The letter was signed by leaders of 41 organizations, including New Jersey Policy Perspective, New Jersey Urban Mayors Association, Regional Plan Association, 32BJ SEIU, New Jersey Education Association, Ironbound Community Corporation, Raritan Valley Line Mayor’s Alliance, Salvation and Social Justice, Make the Road New Jersey, Tri-State Transportation Campaign, and more.

The letter concludes with four recommendations for NJ Transit moving forward: Refrain from voting on the double-digit fare hike proposal; roll back any future fare hikes to a more reasonable annual increase, with lower rates for local bus routes; save the FlexPass and reverse the proposed 30-day expiration on all one-way tickets; and commit to holding hearings on any future fare hike, with a virtual option, even those proposed in perpetuity.

A copy of the letter can be read here.

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