REPORT: Stop the Sunset: Corporate Tax Cut Would Benefit the Biggest and Most Profitable Businesses

For Immediate Release

February 22, 2023 – With corporate profits at record-breaking levels and tax evasion on the rise, a new report by New Jersey Policy Perspective (NJPP) finds that eliminating New Jersey’s Corporate Business Tax surcharge would cost the state hundreds of millions of dollars in annual revenue while only benefiting a select few ultra-wealthy corporations.

The report, Stop the Sunset: Corporate Tax Cut Would Benefit the Biggest and Most Profitable Businesses, finds that only the top 2 percent of businesses operating in New Jersey pay the Corporate Business Tax (CBT) surcharge, including multi-national corporations not headquartered in the state like Amazon, Walmart, and Bank of America. The surcharge, enacted in 2018, is a 2.5 percent tax on every dollar of net profit above $1 million. 

If the surcharge is eliminated, the tax cut will primarily benefit the biggest and most profitable businesses operating in New Jersey. Corporations with at least $10 million in annual profit would receive 70 percent of the tax cut, according to state data compiled in the report. Corporations with at least $100 million in annual profit would receive an average tax cut of $5 million. Businesses with less than $1 million in profit — representing 98 percent of businesses in the state — would receive no benefit from eliminating the surcharge. 

“The surcharge is a targeted tax on wealthy corporations that can afford it, not small ‘mom and pop’ businesses on Main Streets across the state,” said Sheila Reynertson, Senior Policy Analyst at NJPP and report author. “With federal pandemic assistance expiring, making millionaire corporations pay what they truly owe will be necessary to balance the state budget and maintain funding for vital public services we all rely on.”

Eliminating the surcharge would cost the state at least $664 million in annual revenue, threatening public services, like pre-K-12 education and transportation infrastructure, that make New Jersey an attractive place to raise a family or start a business. 

Corporate business tax collections from the last few years are a clear indicator that corporations are thriving in New Jersey, even with the surcharge in place. Corporate tax revenue increased by 212 percent from 2009 to 2021, the report finds, with the largest increase happening between 2020 and 2021, the latest year data is available. 

“Allowing the corporate tax surcharge to expire would further enrich a relatively small number of profitable corporations while depriving the people of New Jersey essential revenue to fund public needs,” said Marco Guzman, Senior State Policy Analyst at the Institute on Taxation and Economic Policy (ITEP). “Many of these corporations have been getting huge tax cuts at the federal level from the Trump tax law, and there is no reason for the Garden State to pile on. With the New York and Connecticut governors both recently committing to renewing their corporate surcharges, New Jersey lawmakers should take a page from their Tri-State neighbors and extend this tax.”

The report notes that, while wealthy corporations may pay slightly more in state taxes in New Jersey through the surcharge, they received a massive tax cut during the Trump administration, as the 2017 “Tax Cuts and Jobs Act” slashed the federal corporate tax rate from 35 percent to 21 percent, its lowest level since 1946.  

“Giving profitable mega-corporations a free ride off what the rest of us contribute is not what we expect from our elected officials. Policymakers must provide a path of sustainability for the economic future of the Garden State, and making the surcharge permanent is a smart step in the right direction,” said report author Sheila Reynertson. 

Read the full report online here.

Read the full report as a PDF here.

Watch the report release here.

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New Jersey Policy Perspective (NJPP) is a nonpartisan think tank that drives policy change to advance economic, social, and racial justice through evidence-based, independent research, analysis, and advocacy.