Lobbyists Cheer As ‘McGreevey Taxes’ Roll Back

“He went out of his way to attack New Jersey employers,” said Maurice, of the New Jersey Business & Industry Association. “Lo and behold, the last 10 years, we have had zero private-sector job growth. ”

Over the past month, Gov. Jon S. Corzine signed a series of bills that ease business taxes and create grants for growing companies.

“What we’re doing here,” Maurice said, “is rolling back the McGreevey taxes.”

The legislation, Corzine said, sends a clear message to business: “You are welcome in New Jersey, and we will work with you so we can grow and prosper together.”

Corzine’s first economic stimulus bill, signed in November, was something business advocates have sought for a decade. It extends the number of years companies can spread out net operating losses to 20 years, up from seven. Businesses that suffer a loss in one fiscal year would be able to deduct those losses from taxes paid in up to 20 future profitable years.

He also signed a measure (A-2722) that repeals a provision, loathed by businesses, that allows New Jersey to tax businesses on income earned in another state if that state doesn’t tax the income.

Earlier this month, Corzine signed a bill creating a two-year program to give companies $3,000 grants for every job they create, and give them sales tax reimbursements on capital purchases of $5,000 or more. He followed that by signing legislation establishing a $50 million pool of state funds for loans and guarantees to small and midsize businesses, as well as not-for-profit corporations.

The bills were moved swiftly by Democrats and Republicans in the Legislature, who felt obliged to respond as the national economy tanks and the state suffers deep job losses — 34,400 jobs through the first 11 months of this year, according to the state Department of Labor and Workforce Development.

And economists, corporate location consultants and former state government officials see the new tax laws as a step in the right direction toward changing business leaders’ perception of New Jersey as a high-tax, highly regulated state. They also think it will help persuade more firms to locate and expand in the Garden State, which, according to an October report by the Washington-based, nonpartisan Tax Foundation, has “a tax code that reads like a ‘What Not To Do’ for legislators.”

“I’m not saying it’s a panacea for all the sins of past years,” said Michael Horn, state treasurer from 1984 to 1986 under Gov. Tom Kean and now a lawyer at Newark-based McCarter & English. “But these will certainly help change the reputation New Jersey has gained.”

Gil Medina, head of New Jersey operations at Cushman & Wakefield, was more enthusiastic. As an adviser to executives who are seeking new locations for their plants, Medina said the legislation already is making a difference.

“I’m dealing with a major corporation right now that has a significant location in New Jersey that could expand,” Medina said. “They were looking at other states, including Pennsylvania, and when they learned of these reforms, they made clear to us that they would shift the discussion in New Jersey’s favor.”

Medina, a former state Commerce Commission secretary, said the business tax reforms allow him to be more optimistic with clients when talking about investing in New Jersey. “It’s a more positive story we are telling.”

Dan Levine, who worked in the state Treasurer’s office during the McGreevey and Richard Codey administrations and is now an executive director of ADP’s Location and Incentive Services in East Brunswick, agreed.

“Taxes are the one cost state government has control over, so when state government wants to signal that it cares about the business climate, it does it by changing business taxes,” Levine said. “It’s a progression.”

He said Corzine actually started reforms 16 months ago, when he allowed for the expiration of two temporary levies that business owners found particularly offensive: the Alternative Minimum Assessment, which required companies to pay a minimum level of taxes even if they made no money in the taxable year, and the tax on S corporations, such as some law firms, which had been temporarily assessed on both corporate profits and the proportionate income of shareholders. The 107,000 S corporations are now taxed on one or the other.