State Senate President Steve Sweeney unveiled a proposal Tuesday that would raise the corporate business tax rate to 12 percent for businesses registered as C-corporations and earning more than $1 million.
The “surcharge” proposed by Sweeney, D-3rd District, would raise the tax rate by three percentage points.
Sweeney said the plan is in response to the recently enacted federal tax reform plan in which corporations benefitted from a tax cut. Sweeney said he believes his proposal could yield about $657 million in new revenue.
“The Republican plan provided a huge tax cut for corporations, slashing the federal corporate tax rate from 35 percent to 21 percent, while sharply limiting the federal income tax deduction for state and local taxes on which millions of New Jerseyans depended,” Sweeney said. “My bill would recapture a portion of that corporate windfall to fund programs that will make New Jersey a better place to live and work.”
“While we are still studying the details of the proposal, both NJBIA and the Chamber are concerned about the impact this tax surcharge would have on New Jersey businesses,” the statement said. “This 3 percent surcharge on corporate business taxes is in fact a tax increase that would make New Jersey the highest rate in the region, raising it to 12 percent of revenue. This would make us significantly less competitive with our border state of Pennsylvania, which is our No. 1 outmigration state.
“A proposal of this magnitude must be fully vetted, so we thoroughly assess the consequences, intended and unintended. For instance, in vetting the new federal tax law, we see that it broadens the base of income on which C-corps are going to be taxed. It is estimated that New Jersey’s tax revenue will increase up to nearly 12 percent because of this. Therefore, this proposed 3 percent tax increase would be on top of the federal tax burden these companies are now paying and could increase the taxes paid by affected companies by up to 50 percent.”