Republican gubernatorial candidate Jack Ciattarelli decried the state’s $14.5 billion incentives as an “unfair” system that picks “winners and losers,” and which he would hope to replace with a lower corporate tax rate.
“[W]ith that program, New Jersey is in the business of picking winners and losers,” Ciattarelli, a former Republican assemblyman from Somerset County, said in a 21-minute interview on June 25 with NJBIZ. “Why can’t we just have a tax rate that’s very very appealing to all businesses?”
“If I enact changes to the tax code in partnership with the Legislature that accomplish the exact same thing as this program, and those enactments benefit and provide opportunity to all businesses, there’s no longer a need for that program,” he said.
Ciattarelli’s platform calls for lower tax rates for both businesses and residents, and for loosening the state’s tax code. There are also plans to entice more people to retire in New Jersey by making it cheaper to do so, rather than leave the state.
Gov. Phil Murphy – a first-term Democrat who Ciattarelli is trying to unseat this November – signed the state’s sprawling economic subsidy program in January as a means to hoist the state’s economy out of the COVID-19 recession.
The incentive package includes money to attract businesses to move into New Jersey or expand their current footprint here, rent support and seed funding for startups, Main Street business grants, tax breaks for film and television productions, money toward anchor institutions and redevelopment projects, funds toward revitalizing historic properties and polluted sites, and money toward so-called “transformative projects.”
Applications are open already for the key corporate incentive program called NJ Emerge, which is capped at $1.1 billion a year. But no applicants have been approved by the New Jersey Economic Development Authority, which oversees the incentives.
State lawmakers are now fast-tracking a 213-page “clean-up bill” that would loosen rules across the board for getting state incentives, and sweetening the pot by offering more lucrative state subsidies.
The former assemblyman previously voted in favor of the 2013 Economic Opportunity Act that created the controversial Christie-era Grow New Jersey corporate tax breaks.
“I’m all for corporate retention and corporate recruitment programs and in the absence of significant reforms, something is better than nothing, but that’s not going to provide the long-term fix,” said Ciattarelli.
New Jersey Republicans had taken a similar stance: that short of lowering the state’s tax rates for businesses, an economic incentive would only be a temporary solution.
New Jersey’s top corporate business tax rate of 11.5% is one of the highest in the nation, according to the Tax Foundation. Part of a September 2020 budget agreement between Murphy and state lawmakers called for extending the top 11.5% rate for another four years, rather than allowing it to expire and return to the default 9% rate.
A recent WalletHub study found that although New Jersey ranked as the best state to live in, it still ranked 49th in affordability. There are 50 states in the union.
The topic of whether New Jersey is a popular state to live in or leave has also become a polarizing debate across the business and political realms of the state.
Conservative lawmakers and pro-business groups contend that the high cost of living and of doing business have pushed many people out of New Jersey and toward lower-cost states. Murphy has argued that New Jersey is a “good value for money state,” in that the high cost of living is a quasi-premium for all the perks the Garden State has to offer.
Ciattarelli did not indicate which programs in particular he would hope to phase out, but said that “programs specific to certain industries” might be viable to keep.
“Why not have a tax policy that benefits all businesses … large corporations, medium-sized firms, Main Street,” he added. “Once again, with that program. New Jersey’s in the business of picking winners and losers. Why can’t we just have a tax rate that’s very very appealing to all businesses?”
Murphy’s office deferred to his campaign, which could not be reached for comment for this story.