The corporation business tax bill Gov. Phil Murphy signed on Thursday makes New Jersey an outlier in business taxes, particularly when it comes to the treatment of “Global Intangible Low-Taxed Income” (GILTI), NJBIA said.
The legislation was supposed to be a “cleanup” bill that made technical changes to the corporate tax surcharge Murphy and the Legislature enacted in the spring. Instead, it imposes a 50 percent tax on GILTI.” NJBIA opposed the bill.
In a written statement, NJBIA President & CEO Michele N. Siekerka, Esq. said the tax would hurt New Jersey’s global competitiveness and discourage companies from investing in New Jersey.
Here’s Siekerka’s full statement:
“We are extremely disappointed the governor has signed A-4495 into law, which extends well beyond the intended cleanup of the Corporation Business Tax (CBT) legislation passed in July and will place a significant additional financial burden on our state’s largest job creators and discourage startup companies from operating here.
“With the bill now law, New Jersey will tax 50 percent of Global Intangible Low Taxed Income (GILTI), making our state a national outlier in its tax treatment of GILTI. New Jersey is now the only state, other than Maine, to have specifically considered, and affirmatively decided to tax 50 percent of GILTI.
“This provision will negatively impact any U.S. based company that files tax returns in New Jersey, and even more so those companies that are headquartered here in the state. It will further discourage companies from placing their headquarters here.
“This bill also reverses current law, which preserves the value of net operating losses (NOLs) when there is a dividend received deduction. Existing treatment of NOLs puts New Jersey in line with virtually all other states in the country. By undoing this law, small and medium sized startup companies that often don’t turn a profit in their early years will now be penalized.
“This will harm companies in the technology, life sciences, manufacturing, and logistics sectors and limit venture capital investment in the state. This is the same investment the governor was seeking to inspire in his economic plan announced earlier this week.
“These provisions strike at the heart of our regional and global competitiveness, and are yet another hit to the state’s job creators. New Jersey needs long-term, sustainable solutions to address our fiscal challenges, not increased costs.”