REPORT: Reining in Corporate Tax Subsidies: A Better Economic Development Playbook for New Jersey
REPORT: Reining in Corporate Tax Subsidies: A Better Economic Development Playbook for New Jersey
For Immediate Release
TRENTON, NJ (September 18, 2019) – New Jersey’s corporate tax subsidies are a national outlier, both in their cost and how little the state receives as a return on its investment, according to a new report by New Jersey Policy Perspective (NJPP). NJPP released the report earlier today at a press conference outside the State House with advocates and labor unions to commemorate the sixth anniversary of the Economic Opportunity Act.
“New Jersey’s lavish corporate tax subsidies are trickle-down economics at its worst,” said Sheila Reynertson, report author and Senior Policy Analyst at NJPP. “At the price New Jersey is paying per job created — sometimes more than three times the national average — taxpayers will never break even.”
The report, Reining in Corporate Tax Subsidies: A Better Economic Development Playbook for New Jersey, outlines how both the Christie administration and passage of Economic Opportunity Act of 2013 (EOA) enabled an unprecedented spike in corporate tax breaks with questionable benefits for the public good.
New Jersey spent less than $200 million per year on tax breaks until 2010, Governor Christies first year in office. The amount of corporate subsidies approved steadily climbed until 2013, when the total amount surpassed $1 billion for the first time in state history. The following year, the first with the EOA in effect, New Jersey approved $1.8 billion in subsidies. In 2015, the cost of subsidies peaked at $105,192 per subsidized job. The national average spending on corporate subsidies is $33,000 per job.
“Since 2010, lawmakers fixated on big-ticket corporate tax breaks with no evidence they work, and little attention to their collateral consequences or opportunity costs,” said Reynertson. “Lawmakers must rein in these programs and refine their scope so they promote widespread prosperity for workers, their families, and their communities. Without serious reforms, including hard caps on awards, New Jersey will continue to reward already wealthy corporations with billions of dollars they don’t need.”
The report recommends ten key reforms to revamp New Jersey’s approach to economic development: hard caps on annual and per job awards; short award timeframes; local hiring agreements; strict reporting and evaluation criteria; mandatory labor protections, and more. The report notes that if Grow NJ, New Jersey’s largest job creation program, had an annual cap of $200 million, New Jersey would have saved $4 billion in approved subsidy awards.
“There is little evidence corporate subsidies have a significant impact on job creation,” said Reynertson. “Instead of doubling down on failed trickle-down policies, lawmakers should invest in public assets that have already proven to make New Jersey an attractive place to grow a business: safe roads and bridges, high-quality public schools from pre-Kindergarten through college, affordable homes, customized job training, child care, and more.”
NJPP was joined at the press conference by New Jersey Working Families Alliance, New Jersey Citizen Action, SEIU 32BJ, Workers United, and the New Jersey Work Environment Council.
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