Big Tax Breaks Aren’t Working for New Jersey. Here’s a Better Approach

NJPP outlines key fixes to runaway tax subsidy offerings in new reform agenda

Common-sense reforms to New Jersey’s corporate tax subsidy programs would help boost the economy by broadening the state’s economic-development efforts while better protecting taxpayers across the state, according to a report released today by New Jersey Policy Perspective (NJPP).

New Jersey has approved $7.9 billion in corporate tax breaks since the start of this decade in an unprecedented surge in subsidies that has intensified since 2013’s legislative overhaul of these programs ($5.3 billion has been OK’ed since December 2013 alone). This extreme reliance on extravagant rewards for a relative few businesses has done very little to boost the economy and put the state’s future at risk for the next decade-plus.

“In recent years, New Jersey’s tax subsidy offerings have gone from bad to worse to downright terrible, heaping larger and larger financial rewards on companies while requiring them to do less and less, putting the state’s future at risk,” said Jon Whiten, Vice President of NJPP and author of the report. “It’s high time to change course and take a more holistic approach to economic-development in the Garden State. Doing so will benefit all of the state’s businesses and taxpayers, not just the precious few who are able to get big tax breaks.”

NJPP’s subsidy reform agenda identifies 10 proposals – from forcing policymakers to actually pay for the tax breaks that happen on their watch to reducing the focus on retaining jobs that are already in New Jersey – that could help ensure a more responsible approach to economic development in the Garden State.

Chief among NJPP’s recommendations are:

• Restoring spending caps
• Mandating better reporting on outcomes & improving evaluation
• Fixing the ‘net benefits test’
• Eliminating, or developing more stringent standards for, subsidies for jobs that already exist in New Jersey

The report comes as several candidates for governor have pledged to clamp down on the state’s abuse of these tax breaks, and as the Deputy Republican Leader in the Assembly has introduced legislation to end the current programs two years early because the state “went too far, too fast,” as she told a reporter.

“The next governor will have an enormous opportunity to right the wrongs inherent in New Jersey’s flamboyant subsidy programs. This reform agenda offers a reasonable, easy-to-act-on roadmap for sensible change that would greatly benefit the state’s future,” said NJPP President Gordon MacInnes. “But there’s no need to wait until next year for lawmakers to start to fix what they’ve broken. We hope more will follow Assemblywoman Handlin’s lead, and be open and honest about the monster they’ve created.”

Contact: Jon Whiten, NJPP: 609-393-1145 ext. 15 | 917-655-3313 (cell) | whiten@njpp.org