By Briana Vannozzi
Jill Sasso opened her specialty grocery store in downtown Lawrenceville four months ago. When she heard about a movement to close corporate tax loopholes in New Jersey, she jumped on board.
“I can pay my fair share. Why can’t larger corporations? I know my share might be smaller, but cumulatively it all adds up,” she said.
Sasso is part of a growing field of small business owners urging the Legislature to pass the “combined reporting” bill. If signed into law it would prevent multi-state companies from shifting profits across state lines and paying lower tax rates.
“They are upset because they have to pay what these multi-national corporations are not paying because they’re using accounting manipulations to avoid paying New Jersey taxes. This will put an end to that,” said Sen. Ray Lesniak.
At a State House press conference, small business advocates said the bill could generate $300 million a year in revenue for the state, playing on the need to fund critical projects — pension payments are in limbo, the Transportation Trust Fund is empty and revenue expectations continue to fall short.
“It’s such a common sense policy that 25 other states and the District of Columbia actually have adopted combined reporting,” said Jerome Montes, organizer with the New Jersey Main Street Alliance.
Proponents argue big corporations create subsidiaries in states with lower or no corporate tax rates, evading the system by paying profits there instead, putting it on the backs of the little guys.
“We all benefit from what our state has to offer. Small businesses like mine should not bear the burden paying for services that benefit all businesses,” said Barbara Stanton, owner of Heritage Lighting in Lambertville.
“It’s also a much more equitable and sustainable way of boosting revenue than ending the income tax agreement between New Jersey and Pennsylvania,” said Sheila Reynertson, senior policy analyst with New Jersey Policy Perspective.
Ending the reciprocal agreement between the two states has become a hot issue in Trenton. Even still, New Jersey’s Business and Industry Association says this isn’t a foolproof method.
“Maryland looked at it and they issued a report. They studied it as if they were to have combined reporting in the state, and Maryland proved that they would have seen an increase in one year but they would have also seen a decrease in another year in CBT revenues,” said Andrew Musick, director of taxation and economic development with the NJBIA.
Casinos are already required to file combined reporting. And Musick says the state already has a number of mechanisms in place to ensure corporations are paying accurate taxes.
“They have things like ad backs for both interest and royalties as well as the director of the Division of Taxation already has the ability to require a company to file a combined report,” he said.
“Like my other fellow business owners, we work really hard and the margins are slim so we just want to make sure the playing field is level,” Sasso said.
So far 50 small businesses have pledged their support in favor of the bill. It’s expected to go for a full vote before the Senate this Thursday.