By Assemblyman Joseph Vas
I would like to take this opportunity to inform you about some new bills which I have introduced these past couple of weeks. I initiated these proposed legislations by the input from the business community, the new package of bills called the Economic Stimulus Package.
The five-bill package is designed to reinvigorate New Jersey’s flagging economy through a combination of tax credits, exemptions, and breaks for corporations that house manufacturing or administrative operations or conduct a majority of their business within the state. My five-bill stimulus package would primarily modify existing New Jersey law to afford better opportunities to businesses based in the state. The bill package has been referred to the Assembly Commerce and Economic Development Committee and is awaiting consideration.
In the face of the ongoing national recession, it is crucial that we vigorously attack New Jersey’s stigma of being bad for businesses. As Chairman of the Assembly Commerce and Economic Development Committee, it is my responsibility to take proactive steps to improve our business climate now in order to help blunt the severity and prevent further downturn a national recession would cause in New Jersey.
My five-bill stimulus package would primarily modify existing New Jersey law to afford better opportunities to businesses based in the state.
The first measure (A-2720) would allow New Jersey businesses located in urban enterprise zones with at least $3 million in annual gross receipts to receive sales tax exemptions on certain purchases at the point of sale. Current law requires qualified businesses to pay the sales tax and then apply for a refund through the state Division of Revenue.
The current process has been decried by companies as an unnecessary administrative and monetary burden on local businesses. Making this change will help businesses retain access to more of their finances and will help encourage economic growth in the private sector.
A second piece of legislation (A-2721) would provide a 20 percent corporate business tax credit for businesses that are primarily involved in manufacturing. The credit would be applied toward the cost of new manufacturing equipment or toward the cost of improvements, renovation, modernization, or expansion of an existing manufacturing facility in the state.
To qualify as a manufacturing facility under the bill, a corporation would have to be located where more than 50 percent of the property is dedicated to manufacturing equipment. The tax credit for renovations would not be extended if a credit would also be allowed under the existing New Jobs Investment Tax Credit, the Manufacturing and Employment Investment Tax Credit, the Research and Development Credit, or the Effluent Treatment and Conveyance Equipment Credit.
The third bill (A-2722) would eliminate the so-called “throwout” provision of the state’s corporate business tax. Under the current formula used to calculate the portion of a business’s state-taxable net income, sales made in states where the corporation is not subject to tax are not counted, increasing the overall amount in taxes owed by corporations doing business in New Jersey. By eliminating the “throwout” provision, a more accurate and fair representation of a business’s total income – and what portion should be allotted to New Jersey – is produced. A fourth measure (A-2626) would modify the formula used to calculate worldwide income that is subject to New Jersey taxes for businesses that are primarily manufacturers.
Most state corporate business taxes are calculated using a three-factor formula that takes the equally-weighted average of a corporation’s property, sales, and payroll activities in a state, divided by the corporation’s total property, sales, and payroll. New Jersey currently uses a three-factor formula that is sales weighted; sales account for 50 percent of the apportionment, with property and payroll accounting for 25 percent each.
The bill would allow corporations that are manufacturers to use a single factor formula, with sales accounting for 100 percent of the apportionment, benefiting those corporations that have a higher percentage of their property and payroll in New Jersey.
The final piece of legislation (A-2630) would allow municipalities that contain an intersection of the New Jersey Turnpike and the Garden State Parkway that also meet certain other requirements to be considered eligible to apply for the state’s urban transit hub credit. The program is designed to increase economic development in the state’s urban areas by stimulating capital investment and increasing employment. The measure is also sponsored by Assemblyman John S. Wisniewski.
As a corridor state with easy access to the Atlantic Ocean, New York City, and Philadelphia, New Jersey has a lot to offer businesses of all sizes and markets. Corporations seeking to expand must be reminded of this, and additional incentives must be provided for those companies that already call New Jersey home.
This is only a handful of my new bills introduced this legislative session which will accompany my other prime and co-sponsor bills. Should you have any concerns or questions regarding my bills or have proposals for new legislation, please do not hesitate to contact me at my district office at 276 Hobart Street, Perth Amboy 08861, AsmVas@njleg.org, (732) 324-5955.
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