STATE – A New Jersey company is being offered a tax credit worth more than $80 million for building a new 600,000 square foot headquarters and distribution center a half mile from the Jersey City PATH station. Goya Foods Inc. would add 175 “new” jobs using the tax subsidy from the Urban Transit Hub Tax Credit program, but according to New Jersey Policy Perspective, only nine jobs are truly being created.
The other 166 “new” workers include 66 that would be moved from a location in Bethpage, N.Y., and 100 contractors based in Secaucus that would be converted to direct payroll employees or become part of a professional employer organization. This is permissible under the rules of the tax credit program, which was intended to encourage businesses to make capital investments in urban areas near transit and create jobs.
Goya could gain still more tax benefits from Jersey City and the state’s Urban Enterprise Zone program, yet the company is also reportedly considering moving New Jersey workers to another site in New York state instead.
This is not the first time the program has offered tax credits that would yield limited benefit to New Jersey’s unemployed residents. Panasonic used the Urban Transit Hub Tax Credit program to obtain $102.4 million in tax credits to relocate a facility from Secaucus to Newark. That move was touted for keeping 800 jobs in the state and creating up to 200 new positions.
Campbell Soup was originally awarded $41 million in tax credits for shifting 49 employees from Cherry Hill to Camden and adding 50 new jobs over 20 years. However, after the company announced plans to cut 130 South Jersey jobs, state officials reduced the award to $34.2 million and required Campbell Soup to return its Camden workforce to pre-restructuring levels before taking advantage of the tax credits. Company officials said that the reduction corrects an error and requested that the employees moving from Cherry Hill to Camden be removed from the tax credit calculation.
“Somebody has got to explain to me why the Christie administration has no money for cops, firefighters, teachers or jobs but plenty to throw at the first hint of corporate extortion,” said Democratic strategist James J. Devine. “Working homeowners are being told to shoulder more and more of the tax burden but Republicans refuse to raise taxes on millionaires who can afford to pay a little more.”
During the Great Depression, millionaires had a top marginal tax rate of 68 percent, Devine said. In 1963, millionaires had a top marginal tax rate of 91 percent. In 1976, millionaires had a top marginal tax rate of 70 percent. Today, the 375,000 Americans with incomes of over $1 million have a top marginal tax rate of 35 percent.
According to Devine, between 1979 and 2007, the average after-tax income of the top one percent of the population nearly quadrupled, from $347,000 to over $1.3 million. The percentage of the nation’s total after-tax household income going to the bottom four-fifths (80 percent) of the population declined from 58 percent to 48 percent during that time period.
Reducing the income tax on top earners is one of the most inefficient ways to grow the economy according to the non-partisan Congressional Budget Office, but 44 percent of Congress people are millionaires, Devine said.
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