By Assemblyman Christopher DePhillips
It’s the time of year when many people make New Year’s resolutions. Some people might go on a diet, or start working out. New Jersey needs to do both for the sake of our economy before it is too late.
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New Jersey’s high taxes are taking away from people, and, as a result, taking resources away from economic growth. The Garden State’s most consistent economic rating is ‘nation’s worst business environment’ and ‘dead last for fiscal health.’
We are at a critical stage in the global economy where many businesses will want to move back to the U.S. to avoid supply chain problems that occurred during and after the pandemic. New Jersey isn’t a destination for them, but it can be if we make simple changes.
First and foremost is gradually lowering our nation-high tax rate – and globally high if you consider the national tax on top of it – on businesses to 2.5%, which would be among the lowest in the nation. Pennsylvania is lowering its corporate tax rate to 5%. They are gearing up to take our businesses and the businesses that want to increase their domestic presence.
If you have doubts that lowering the corporate business tax to 2.5% will work, I have evidence that it does.
In 2013, North Carolina started gradually cutting its corporate business tax to that low rate. Every time revenue went up, the tax would lower a proportionate amount. That’s right, they cut their tax and revenue increased — which allowed North Carolina to cut its tax more and get more revenue out of it.
The state received more revenue because after cutting its business tax, it led the nation in economic growth for three years. More jobs, better pay, lower unemployment, and all-around economic growth.
Despite the efforts of the New Jersey Economic Development Authority, our state continues to be the worst state in the nation for business. I support the EDA, tax credits are a useful tool; but we need to help every business, not just those the government thinks are worthy. That should be New Jersey’s New Year’s resolution.
To show my point, the most recent EDA report, from 2020, shows that it helped only 400 of New Jersey’s then-937,000 businesses.
That is less than a quarter of 1 percent (0.0004%) of businesses getting EDA assistance, while 99.999% of businesses grapple with the worst business environment in the country every year.
