New Jersey Business Lawyers Consider the Consequences
New Jersey’s economy has been stagnant as of late. Unemployment is at 6.4 percent, higher than the national average, and the state’s credit rating is the second worst in the United States. The pension and benefits system is desperately underfunded, receiving $2.4 billion less than promised due to budget shortfalls.
As the state economy has dwindled, the state government has pushed increasingly aggressive corporate subsidies to keep companies from moving to other states. In 2014, New Jersey committed a record-breaking $2.1 billion to corporate incentives.
The state’s subsidies have convinced a couple of companies to conduct business in the Garden State. Subaru, for example, was in talks to move its U.S. headquarters to nearby Philadelphia from Cherry Hill, N.J., but a $118 million tax incentive convinced them otherwise. A spokesperson from Pennsylvania admitted that New Jersey’s offer far outpaced Pennsylvania’s.
Subaru chose to set up shop in Camden, one of the nation’s poorest cities. Over the last year, $644 million in incentives has been pledged to the city of 77,000, a move that Tim Lizura of the New Jersey Economic Development Authority hopes will draw new residents, businesses and visitors.
Subaru is joined by the NBA’s Philadelphia 76ers, which will be building a practice facility in Camden thanks to $82 million in tax breaks and incentives.
Do Tax Incentives Stimulate Local Economies?
While tax incentives are popular amongst voters, some critics worry that the incentives are not having the desired effect. Some have called the tax incentives corporate welfare and believe the money should be spent elsewhere –the starving pension fund, for example – especially if the incentives benefit businesses that had no serious plans to relocate.
When a city offers tax breaks to a company like Subaru, the city weighs the expected benefits versus the expected costs to determine whether the proposed tax breaks would provide a net gain for the city.
Does my Business Qualify for New Jersey Tax Breaks?
A business attorney in New Jersey can let you know if your company can take advantage of subsidies, tax breaks, business loans and other forms of financial incentives offered by the state. Garland & Mason, L.L.C. focuses on helping small and mid-size businesses in New Jersey maximize their chances of success while ensuring that they respect state and federal regulations. Contact our firm to find out if you have options for saving on expenses and growing your business.