Governor Corzine Signs Legislation Encouraging Business Growth In NJ

For Release: December 19, 2008

Contact: Robert Corrales, 609-777-2600

GOVERNOR CORZINE SIGNS LEGISLATION ENCOURAGING BUSINESS GROWTH IN NJ

(TRENTON) – Gov. Jon S. Corzine today signed legislation that will make New Jersey more attractive to businesses by reforming the state’s corporate tax law – one of the final facets of the Governor's Economic Assistance and Recovery Plan.

The bill, A-2722/S-3, eliminates the so-called throw-out rule and the regular place of business requirement under state corporate business tax law.

“If we are to maintain and expand the New Jersey economy, we must employ every conceivable tool at our disposal to encourage robust business growth,” Governor Corzine said. “Through the modification and elimination of laws unfriendly to business, it speaks volumes to New Jersey’s commitment to the state’s economy and an open-door policy toward business enterprises in our state.”

Under the throw-out rule, multi-state corporations are assessed corporate income tax liabilities based on an allocation formula that takes into account income from sales that are not taxed by other states.

“Protecting our businesses now will ensure that our economic engine will not stall if the economy continues to worsen,” said Assemblyman Joseph Vas (D-Middlesex), who introduced the bill in May. “We have to be sure to remove any hurdles that are blocking economic development in these tough times.”

This throw-out of sales not subjected to tax in other states has had the effect of increasing the amount of income subject to tax in New Jersey. The bill signed today by the Governor eliminates the throw-out provision, thus lowering multi-state corporations’ tax liabilities here.

“During a time of national recession and economic uncertainty, this overhaul should be a welcome relief to businesses, particularly those that are struggling,” said Senate President Richard J. Codey (D-Essex), a prime sponsor of the bill. “The elimination of the ‘throw-out’ rule will also create a more business-friendly environment for New Jersey to compete with the majority of other states.”

The other reform involved New Jersey law that required corporations to have a regular place of business in another state in order for the corporation to apportion less than 100 percent of its income under the formula that determines taxes owed to New Jersey. A regular place of business was defined as a bona fide office maintained by at least one employee of the corporation.

“We are removing yet another obstacle and helping ensure businesses emerge strong from this global crisis,” said Assemblyman Louis Greenwald (D-Camden). “Strong businesses mean good jobs for New Jerseyans, and ensuring we retain and create strong jobs is a priority.”

“This law will make New Jersey’s economy more competitive, increasing its ability to attract business and create job opportunities,” said Senator Steve Oroho, (R-District 24). “The bill’s success is proof that we can address this economic crisis with bipartisan cooperation and common sense. I applaud all who worked so hard to make it possible.”

The bill signed today eliminated the regular place of business requirement and allows corporations to apportion less than 100 percent of its income even if it does not maintain a regular place of business in another state.

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