N.J. Bill Would Close Corporate Tax Loophole
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Democrats in the New Jersey State Legislature introduced a new bill that would close a corporate tax loophole.
State Senators Ray Lesniak, Linda Greenstein and Paul Sarlo introduced a bill that would require “combined reporting” on income from multi-state corporations. Some corporations use subsidiaries to report income from New Jersey in other states — so they can avoid New Jersey’s 9 percent income tax.
Combined reporting would require the multi-state corporations to combine all of their income and report it to New Jersey, which would then determine how much was generated in New Jersey and how much the company owes.
The Senators pointed to a recent report from the New Jersey Policy Perspective on the benefits of closing the loophole. The report found that the state is missing out on some serious cash.
“Under combined reporting, New Jersey could collect a substantial amount of revenue it is legally owed,” the report said. “Combined reporting could boost corporate tax collections by 10 to 20 percent, bringing in hundreds of millions of dollars that would help preserve education, health care and other services that boost the state’s economy.”
Lesniak said that New Jersey brings in $2.6 billion per year in tax revenue, so it stands to recoup around $200 million if the bill is passed.
“We currently have 100 percent support within the Democratic legislators,” he said in a phone interview Friday. “We already have one assembly Republican, but I expect I’ll have a lot of Republican support because this isn’t a tax increase. It’s tax fairness.”
He also expects to have the support of Gov. Chris Christie.
“It will no doubt pass. The only question is whether it passes unanimously or not,” he added.
Lesniak said the bill would also level out the playing field for small business owners who don’t have the luxury of owning properties in other states and are paying income taxes in full, which he feels adds to its bipartisan nature.
The law is already in effect in 25 states across the country. Pennsylvania is not one of them.
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