First Day of Action on “Back to Work NJ” Package Focuses on Making State Friendlier Place for Business
TRENTON – The Senate Budget and Appropriations Committee today released its first seven measures aimed at making New Jersey a friendlier and more competitive state for business by cutting taxes for Garden State companies and creating new incentives for businesses to stay and grow.
The bills are part of the recently unveiled “Back to Work NJ” legislative initiative to create jobs and promote the state as a better place for business.
“With unemployment stubbornly stuck above 9 percent, we need to be aggressive in our efforts to retool and reposition our economy,” said Senate President Stephen M. Sweeney (D-Gloucester/Cumberland/Salem). “This package is about creating new economic opportunities not only for business, but for working families across the state. For their sake, we can’t act fast enough.”
“Growing our economy will not only create new jobs, but will ultimately grow state revenues and strengthen New Jersey’s bottom line,” said Senator Paul Sarlo (D-Bergen/Essex/Passaic), chairman of the budget panel. “Making New Jersey a better place for business is a crucial stop on the road to fiscal health.”
The lead bill among the economic growth initiatives considered today would alter the state’s corporate business tax formula to remove preferential tax treatment which out-of-state companies that simply offer products and services received, as opposed to benefitting businesses that are actually based in New Jersey. By implementing a “single sales fraction,” the bipartisan measure (S-1646) would level the playing field for New Jersey businesses by removing consideration of a company’s physical in-state assets from its tax liabilities – a system that, under current law, benefits out-of-state companies.
“It makes absolutely no sense that our tax laws would actually penalize companies that are based in New Jersey and employ New Jerseyans,” said Sweeney, who is sponsoring the bill with Sen. Steven Oroho (R-Sussex). “We need to bring business into the state, not drive them out. Eliminating this disparity will go a long way to having our tax code make common sense for business.”
The second measure (S-2454) – the “New Jersey Angel Investor Tax Credit Act” – would create specific gross income and corporate business tax credits for start-up investments of up to $500,000 made in New Jersey-based high-tech and biotechnology companies. So-called “angel investors” are individual entrepreneurs who provide the massive capital investments that start-up technology businesses need to get up and running. The bill is sponsored by Sen. Fred Madden (D-Gloucester/Camden).
“High tech businesses don’t just sprout on their own – they very often rely on equity investors willing to take a chance that an idea will become a world-changing technology,” said Madden. “Offering a direct credit to individuals and businesses will help seed the next generation of companies we will rely on to create jobs for years to come.”
Another Madden bill (S-2398) would direct the New Jersey Economic Development Authority and the state Commission on Higher Education to work to bring together business and the state’s colleges and universities for joint research and development ventures. Madden said such ventures would be especially valuable in the research-driven technology and life-sciences industries.
“New Jersey’s businesses should be able to tap into the power of our higher education community,” said Madden. “We already are home to some of the world’s leading academic research facilities, so pairing our colleges and universities with high-tech companies can be a win-win situation.”
Senator Nia H. Gill and Senate Republican Leader Thomas H. Kean, Jr., are sponsoring bipartisan legislation that would enable companies to locate “captive insurance” companies – entities that essentially self-insure themselves and their customers – in New Jersey. More than 25 other states and the District of Columbia have laws regulating captive insurance companies. The Gill/Kean measure (S-168) is based on Vermont’s captive insurance law, which is credited with making that state the world’s third most-common home for captives, generating $13 billion in premiums in the state in 2009.
“Captive insurers are already operating in more than two dozen states in the country,” said Gill (D-Essex). “By allowing these types of insurers to operate in New Jersey, we would significantly expand our insurance market and draw new businesses and jobs to the state.”
Another bill would expand eligibility for investors to take advantage of state tax credits for mixed-use development projects located near urban transit centers. The measure (S-2183) would provide developers involved in $50 million mixed-use projects with tax credits of up to 100 percent of a minimum $17.5 million investment in the commercial aspect of the development, and of up to 20 percent for a similar minimum investment in a project’s residential component.
Sen. Donald Norcross (D-Camden), the bill’s sponsor, said the credits would encourage redevelopment in the state’s urban centers, creating construction jobs as well as new homes for business.
“Using tax credits to jumpstart redevelopment in our cities is critical not only to creating new jobs in the construction industries, but for rebuilding communities so that businesses can grow and thrive,” said Norcross. “Giving companies and residents a new incentive to locate in our transit hubs is smart planning and smart business.”
Senators Jeff Van Drew and Jim Whelan are sponsoring legislation (S-2132) that would provide businesses located in one of the state’s 33 urban enterprise zones (UEZ’s) with a sales tax exemption when purchasing items and equipment for their businesses. Currently, only small businesses with sales of less than $10 million are eligible for the “point of sale” exemption; other businesses must apply to the state for a reimbursement.
“UEZ-based businesses are a vital link to reestablishing commerce and creating jobs in many of the state’s historic downtowns,” said Van Drew (D-Cape May/Atlantic/Cumberland). “The more businesses we can attract, the more jobs we can create, it’s really that simple. This tax exemption will attract those businesses.”
“Consumers already enjoy the benefits of the lower sales tax rate offered by businesses in a UEZ, but the businesses themselves aren’t given the same treatment on the purchases they make,” said Whelan (D-Atlantic). “This will ensure that UEZ’s become a good deal for shoppers and businesses alike.”
According to the state Department of Community Affairs, the UEZ Program supports more than 139,000 full-time jobs and has attracted in excess of $26 billion in private investment since its inception in 1983. Nearly 6,500 businesses operate in a UEZ.
The final bill considered today, sponsored by Senator Sandra Cunningham (D-Hudson), would encourage banks to locate new branches in traditionally underserved areas. The bill (S-2286) would create a new Banking Development District Program in the state Department of Banking and Insurance to work with licensed financial institutions to open the new banking centers. In addition, municipalities would be able to deposit public funds in the new banks, mirroring a similar program in New York State.
“Many New Jerseyans take their local bank for granted,” said Cunningham. “For many others, their financial choices are limited to check-cashing storefronts or banks located far from their homes. Not only should we be promoting sound financial practices among all residents, but these new banks can create new job opportunities in the communities where they locate.”
The bills now are poised for final votes in the full Senate.