TRENTON, N.J. (AP) — New Jersey businesses earning more than $1 million would see their corporate tax rates go up, with proceeds going toward school funding under a proposal Senate President Steve Sweeney unveiled Tuesday
Sweeney, a Democrat, said the measure would allow New Jersey to capture funding that businesses are expecting to receive thanks to the federal tax overhaul, which lowered corporate rates from 35 percent to 21 percent.
The move is expected to bring in $657 million in new revenue for New Jersey, Sweeney said. He wants to use the money to help fund schools, with some of the new revenue going toward special education and pre-school.
“We’re not increasing their costs,” Sweeney said. “This is a windfall. We’re asking for a portion of the windfall to help taxpayers.
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The proposed change would effectively raise the rate from 9 percent to 12 percent for companies with income over $1 million. The proposal would not apply to small businesses or partnerships owned by individuals and families, Sweeney said.
The $657 million expected from Sweeney’s proposal is slightly higher than an estimated $600 million expected from a tax hike on millionaires that Democratic Gov. Phil Murphy favors.
Murphy said doesn’t see Sweeney’s idea as a replacement for the tax millionaire tax. But he sounded open to considering it.
“I don’t see it as an alternative, perhaps as an additional weapon at our disposal,” he said.
Republicans panned the idea.
Senate Republican Leader Tom Kean Jr. said the proposal demonizes employers and chases jobs from the state.
The state Chamber of Commerce and New Jersey Business and Industry Association said in a joint statement they’re concerned the change would make New Jersey less competitive compared to Pennsylvania.