the staff of the Ridgewood blog
Ridgewood NJ, New Jersey Governor Phil Murphy has made drawing new industries to the Garden State a key priority, aiming to present New Jersey as a business-friendly environment. The state Economic Development Authority (EDA) has been pivotal in this effort, offering substantial tax incentives to various industries.
Significant Tax Incentives
Recent years have seen New Jersey allocate significant tax incentives, including:
- $758 million for the film and television industry
- $500 million for artificial intelligence development
- $109 million for financial technology firm Fiserv and nearly $10 million for Party City, both in affluent suburbs
Governor Murphy, along with the Legislature and EDA leaders, view these incentives as vital investments to stimulate the state’s economy. However, the actual benefit to New Jersey and its residents remains a topic of debate.
Measuring the Impact
Peter Chen, a senior analyst at the non-partisan New Jersey Policy Perspective, noted the difficulty in assessing the effectiveness of these tax incentives. “If you want to attract someone to your area, you’ve got to offer them more tax credits than the other guys are offering. The question is, does it actually help the economy?” Chen remarked. The uncertainty lies in whether these incentives attract new investments or merely reward businesses that would have come to New Jersey anyway.
The Film and Television Industry
One notable sector benefiting from these incentives is the film and television industry. However, this industry is known for its mobility, often relocating based on the best tax incentives. Major studios have planned significant infrastructure investments in New Jersey:
- Netflix is developing a $1 billion soundstage at Fort Monmouth, earning $125 million in incentives.
- Lionsgate is constructing a $194 million, 350,000-square-foot studio in Newark, qualifying for up to $100 million in tax breaks.
Despite these investments, skepticism remains. “The film and TV tax credit is particularly galling because there’s so much research on this specific industry that shows that the return on investment is not good,” Chen said. He argues that these tax breaks benefit film studios more than the state economy, as productions can easily relocate, leaving behind empty soundstages.
Artificial Intelligence Development
New Jersey is also focusing on artificial intelligence (AI) development, offering substantial incentives. A new law signed by Murphy sets aside tax breaks for businesses heavily involved in AI, with incentives worth up to $250 million. However, this program lacks a “net benefits test” to ensure economic returns for the state.
Chen expressed concerns about the AI incentives, suggesting that they might not yield the hoped-for returns. “Every time I open my phone, another app is telling me to use their AI assistant instead of just letting me search what I actually want,” he said, implying that AI development is already well-funded without state investment.
The Challenge of Long-Term Benefits
Will Irving, a professor at the New Jersey State Policy Lab at Rutgers University, pointed out that the state’s existing incentive programs, such as NJ Emerge, already attract businesses, particularly in economically disadvantaged areas. He questioned the necessity of new AI-specific incentives.
EDA CEO Tim Sullivan acknowledged the potential conflict between attracting energy-intensive industries like AI and New Jersey’s climate goals. He emphasized encouraging clean energy use in these projects and highlighted the importance of building infrastructure that supports long-term success.
A Call for Effective Investment
Critics like Chen argue for focusing on programs with proven benefits, such as investing in affordable housing and supporting small businesses and startups. These programs, he contends, have more defined guardrails and are easier for state employees to manage.
The Murphy administration’s tax incentives have drawn scrutiny, especially regarding accountability. Past abuses, such as those linked to the Grow New Jersey program, have led to calls for more oversight. Critics argue that the state should prioritize creating a favorable living environment, investing in higher education, and fostering economic development through sustainable means.
Conclusion
New Jersey’s efforts to attract new industries through substantial tax incentives highlight the complexities and challenges of economic development. While these incentives aim to boost the state’s economy, their long-term benefits and effectiveness remain subjects of debate. Balancing immediate attraction efforts with sustainable, community-focused investments will be crucial for New Jersey’s future economic health.
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You have to be brain dead to open a business in NJ.
We have the Democrats ruining this state.
Thats why all the big earners moved to FLA. (tax=friendly)