By Brenda Flanagan
Correspondent
Small co-ops and shop owners know New Jersey’s been handing out special, multi-million dollar tax breaks to big corporations to keep jobs here in Jersey — $5 billion since 2010. Some say they’d like a slice of that largesse.
“Spread the money more around, and they give more opportunity to small business and medium business, it’s not just helping out the big business,” said Douglass Pizza owner Said Selim.
“All of our staff members live in Middlesex County, so any tax breaks given to our business would be kept definitely in New Jersey,” said John Leary, general manager of George Street Co-op.
A new study reports the whopping tax subsidies granted to major corporations, by New Jersey’s Economic Development Authority, could end up costing taxpayers more than they bring in risky business.
“The formula they use is so lopsided that we’re making grants that no reasonable person — never mind a reasonable banker — would ever make,” said New Jersey Policy Perspective President Gordon MacInnes.
MacInnes points to Camden, where nine companies — including Holtec, Subaru and Lockheed Martin — have reaped tax subsidies totaling more than $630 million. The state estimates a $300 million return, but that’s over 35 long years. The report calculates a potential $97 million loss, instead — because these companies can walk away in 15 years.
“The business world changes at a rapid pace. The idea we can project what happens 35 years in advance — and we come up with a very, very tiny benefit to the taxpayer — that is a risky deal,” MacInnes said.
Currently, the state only needs to net a 100 percent return — basically, to break even — over 35 years, but a company’s obligation lasts just half that long.
Advocates want a return to the prior net benefits test. It offered a slightly better return on the tax subsidy — 110 percent — and obligated businesses receiving big tax breaks to stay put for the entire benefit period. But Republican Assemblyman Tony Bucco says wait — there’s more than just tax benefits.
“You have not only the property values that go up, as these areas redevelop, but you also have all the revenue that’s generated from the restaurants and stores that will benefit from the people coming into those areas — where before, they were blighted,” Bucco said.
Bucco co-sponsored the revised law that loosened regulations on tax subsidies. While he’s open to making some changes, he says big business reps told him they need those subsidies.
“And if you take them away, we’re going to lose people because right now New Jersey’s at a point it’s no longer profitable for companies to come here,'” he explained.
Politicians on both sides of the aisle want numbers to gauge whether these large tax breaks are working so far. They will undoubtedly ask the EDA commissioner for some intel at budget hearings tomorrow.