Two bills that have long been supported by New Jersey businesses became law Thursday, as Gov. Chris Christie signed measures to base the corporation business tax solely on sales and to allow small businesses to apply losses to lower their income taxes.
Christie waited until the deadline to sign the bills. Administration officials had expressed concern that the Legislature had passed the bills outside of the state budget process.
“Today, we are providing critical tax reforms and incentives to boost our economy, foster job growth and opportunity for New Jersey families, and putting a down payment on a more prosperous future for our state,” Christie said. “We must continue to take action to lay a sustainable fiscal path for New Jersey, ensure that tax cuts are done in the context of a balanced budget and implement reform in the most efficient manner possible.”
Christie added there was a bipartisan consensus to improve the state’s “oppressive business tax climate through tax policy changes and common-sense regulatory reform.”
New Jersey had trailed other states in basing the CBT on only sales, rather than a combination of sales, payroll size and in-state property. The measure, S-2753, will benefit many businesses that have a large presence in the state, though some retailers with high sales will lose money.
The other bill, S-2754, will allow business owners who report business income as personal income, such as S-corporation owners, to “carry forward” business losses to reduce tax liability in future years. These losses can be carried forward for as many as 20 years.
This will put many small businesses on the same tax footing as corporations, which already can carry forward net losses to reduce their corporation business taxes.
Christie had vetoed earlier versions of the bills, which the Legislature had passed prior to his budget being released. He included his own versions in the budget, and legislators rewrote the bills to conform to these versions.
Philip Kirschner, president of the New Jersey Business & Industry Association, said it was encouraging to see the bills signed.
“This is a real positive for New Jersey and its tax policy — and its competitiveness with other states,” Kirschner said. “It really brings us into the mainstream and will help in job creation.”
Michael Egenton, senior vice president of the New Jersey Chamber of Commerce, said the bills will broadly benefit state businesses.
“The nice thing about these two bills is our largest companies will benefit from the single sales factor, and our smaller companies will benefit from the loss carry forward,” Egenton said.
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