During a Jan. 12 interview on Bloomberg Television’s “Balance of Power with David Westin,” Gov. Phil Murphy made some news by signaling he supports ending the corporate business tax surcharge when it expires at the end of this year.
The 2.5% surcharge is on top of the 9% corporate business tax for companies making more than $1 million in taxable income. The surcharge was supposed to be temporary and phase out by 2021. However, it was extended by the Legislature in 2020 until the end of 2023.
“You have a corporate business surcharge tax that’s been in effect that is due to expire. Do you plan to keep that going or are you going to let that lapse?” Westin asked Murphy.
“I am on the side (of) a deal is a deal,” said Murphy. “We’ve committed that (the surcharge) would lapse and go away. And that’s where I am as we speak.”
Letting it sunset has been something business groups and many lawmakers have called for.
Senate Budget Chair Paul Sarlo, D-36th District, immediately put out a statement welcoming Murphy’s support. During the New Jersey Business & Industry Association’s (NJBIA) 2023 Public Policy Forum in December, Sarlo pledged that he would ensure the sunset of the surcharge.
“That was our intention when it was first implemented, and I reinforced that commitment in December,” Sarlo said. “It’s important that we keep our promises so the business community can plan and operate with certainty. Removing the surcharge will provide tax relief that will help fuel the economy and continue to ensure that New Jersey is an affordable place to operate.”
The NJBIA applauded the announcement, but also expressed hoped it was just the start of even more to support businesses in the Garden State.
“The (CBT) sunset will be welcome and we will cheer to the mountains to see that happen – but that must be step one,” said Michele Siekerka, NJBIA president and CEO.
“The business community appreciates Gov. Murphy acknowledging that the temporary CBT surtax is supposed to sunset at the end of 2023 and is allowing it to do so,” said Christopher Emigholz, NJBIA chief government affairs officer. “NJBIA looks forward to continuing to work with him to make our state more affordable and competitive.”
When NJBIZ spoke with New Jersey Chamber of Commerce President and CEO Tom Bracken after Murphy’s State of the State Address this week, he mentioned the sunset of the surcharge as one of the top issues on his mind for 2023.
“Next year, the corporate surcharge sunsets, which would reduce the corporate business tax by 2.5%,” Bracken said. “Making sure that happens would be great. The tax issue will always be a challenge here because we are a high-tax state. But the first step in having that reduced is to make sure the surcharge goes away.”l