Two news items appeared in Sunlight’s inbox yesterday, and their juxtaposition tells you all you need to know about New Jersey’s special-interest-dominated status quo and the very high taxes that go with it. This malign status quo is why New Jersey was ranked dead last in the nation for its tax climate for businesses — for the 8th year in a row and for every year that Gov. Murphy has been governor.
First, we saw a public letter to Murphy from a coalition called “For the Many” urging Murphy to extend the 2.5% corporate surtax in his FY2024 budget. Recall that Murphy extended the surtax in the middle of the pandemic until December 31, 2022, which kept New Jersey at the highest corporate tax rate in the nation at 11.5%. For the Many is a coalition of inter-connected special interests, led by the state’s powerful government unions, including the most powerful, the NJEA. For the Many was formed in 2020 as a successor to a different budget-oriented coalition (Better Choices for New Jersey) with the same cast of characters. Their common agenda is to push for what all government unions want: higher taxes to fund more government spending. Just like its predecessor, For the Many supports higher income taxes, higher sales taxes and higher corporate taxes.
For the Many is just one in a long list of coalitions funded by the NJEA and other government unions and made up of their allies. While For the Many’s signatories appear to represent a broad and deep coalition, they don’t really. Several (Healthy Schools Now, Jersey Renews Coalition, NJ Alliance for Immigration Justice, NJ Work Environment Council, Our Children/Our Schools, Working Families, NJ Citizen Action) are alliances and coalitions that are made up of much the same members as For the Many. Others are close allies of and have received funding from the NJEA: BlueWaveNJ, Latino Action Network, NJ Policy Perspective, and Save Our Schools, all of whom participate in multiple NJEA/government union-sponsored coalitions. (The NJEA has also funded NJ Work Environment Council and Working Families). So when you see For the Many, think of government unions and their allies, who always and everywhere want higher taxes.
Which brings us to the second news item: a report from the Tax Foundation listing the corporate tax rates for all the states. As it has since Murphy initiated the 2.5% surtax in his first budget as governor, New Jersey has the highest corporate tax rate in the nation. Here are the top five:
- New Jersey – 11.5%
- Minnesota – 9.8%
- Illinois – 9.5%
- Alaska – 9.4%
- Pennsylvania – 8.99%
More importantly, here are the corporate tax rates for the five surrounding states that New Jersey competes against for businesses and jobs:
- Pennsylvania – 8.99%
- Delaware – 8.7%
- Maryland – 8.25%
- Connecticut – 7.5%
- New York – 7.25%
New Jersey’s 11.5% tax is much higher than any of these surrounding states, which puts our state at a significant competitive disadvantage. That’s why New Jersey has been losing businesses for years. Other states know this, which is why #2 Pennsylvania just cut its corporate taxes from 9.99% to 8.99% and will cut them by a further 0.5% every year until they reach 4.99% in 2031. Thanks to special-interest coalitions like For the Many, New Jersey is going in the other direction.
For the Many is really “For the Few:” for the few connected special interests who are Murphy’s biggest political supporters: the NJEA and its government union allies. Once again, under Murphy, the special interests win and New Jersey loses.