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Testimony on A.3420
Assembly Appropriation Committee
December 13, 2001
The League of Women Voters of New Jersey urges you not to release for
a vote A.3420, which changes how corporations are taxed. There are many
reasons why you should not change the formula. These include:
Tax loss: The Treasury Department estimates a loss of $250 million
in revenue. This 19% cut will add to New Jersey’s budget deficit. Seven
states that changed to the single factor sales system lost significant
amounts of state revenue.
A few large corporations get most of the benefits: A few large
corporations receive a large proportion of the tax relief while other
businesses pay tax increases or get little or no tax break. This creates
an unjustifiable shift in tax burden among corporations.
Job creation and investment: Nationwide studies of corporate
plant location and investment and of manufacturing growth provide no
evidence that adoption of the single factor results in significant job
creation or increased investment in a state. A study of plant location
and investment between 1995-2000 found 51 investments of $700 million
or more across the nation. Only 6 were in states using the single factor.
Benefits of public services: Companies with property and plants
and significant numbers of workers benefit far more from costly public
services than businesses who make sales only. This change ignores the
reality that a skilled labor pool, high quality roads and other public
infrastructure, and good public schools and colleges have at least as
much influence on a state’s attractiveness for investment as tax burden.
Those who use these services should not be absolved while shifting the
tax burden to those who only make sales within a state.
Presented by:
Sandra L. Matsen
President, LWVNJ
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