BUSINESS & ECONOMY

Business Report Plus: GOP tax plan dominates headlines

BY Rhonda Schaffler, Correspondent |
  • Rutgers-Camden expert discusses effect of GOP tax plan’s corporate tax rate
  • Government jobs report shows U.S. economy added 261,000 jobs in October
  • Record-level independent spending reported in legislative races
  • S&P weighs in on New Jersey’s fight against opioid addiction, as state announces suit against Purdue Pharma
  • Peter Buffett discusses his family’s philanthropic efforts

Money and politics, that’s was the focus of our week in business. By now you’ve probably heard much about the House Republican bill to overhaul the tax code, which hasn’t been done for decades. Politicians say the bill is bad for New Jersey, as Michael Aron reported on Friday.

But one of the biggest questions about the tax reform plan is the future of business investment. Under the Tax Cuts and Jobs Act, the corporate tax rate would be slashed to 20 percent, which is supposed to free up resources for companies to increase their investments and hiring in the U.S., but it’s not clear that will actually happen.

“A lot of previous research has looked at corporate income tax rates that have been cut at the state level and the evidence is mixed, so we don’t have a clear consensus idea,” explained Michael Hayes, an assistant professor of public policy and administration at Rutgers University-Camden. “In theory, I think cuts to corporate income tax rates could benefit workers but I think it really depends on whether or not the benefit is going to workers for those corporations or if it’s going to the shareholders of those companies. If basically those tax cuts are going to be used to get higher dividends to stockholders of the company then it’s not directly going to benefit the workers”

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There were some mixed news on the state of the workforce in October. One of the government’s most important economic releases, the monthly report on jobs, showed 261,000 new positions were created last month. But paychecks aren’t going as far as they used to, with the latest numbers showing wage growth has slowed.

Meantime, lots of money has been spent in Jersey politics as we head toward Election Day. Reports released this week from the state’s Election Law Enforcement Commission showed total spending in the governor’s race reached $23.8 million, and independent spending in legislative races reached a new high at $21.5 million. Those numbers don’t include any last minute spending in these final few days.

New Jersey is planning to spend more money on its war against opioid addiction, and while the state has its fiscal challenges, financing that battle will not be a setback. That’s the opinion of Wall Street ratings agency Standard & Poor’s. S&P put out a report this week indicating that the credit rating of New Jersey is not at risk due to the increased spending, which is small part of the state’s overall budget. The state is also taking its drug battle to the courts, as it filed a lawsuit this week against the maker of Oxycontin. New Jersey accuses Purdue Pharma of deceptively marketing its drug as safe for long-term use.

(U.S. Air Force photo illustration/Tech. Sgt. Mark R. W. Orders-Woempner)

Usually we spend a lot of time talking about new business development in the Garden State. But this week, the headlines were filled with reports of big projects being torn down. According to media reports, both the long shuttered Trump Plaza in Atlantic City and the ballpark at the Camden Waterfront will be torn down. Those reports were short of specifics, but we’ll be looking to see what new buildings will rise in their place.

One organization focused on building up small businesses, Rising Tide Capital, held a fundraising event in Jersey City this week to award budding entrepreneurs small business grants. What caught our eye about this event is that one of the attendees was Peter Buffett, son of the world’s most famous — and richest — investors, Warren Buffet. Having the pleasure of interviewing Warren Buffett several times, he’s a down-to-Earth guy who would probably feel right at home sitting at the counter of any Jersey diner.

What’s lesser known about the wealthy Buffet family is their commitment to philanthropy.

“I would guess that most people with a lot of money are probably doing something they either enjoy, or that they’re only able to do given the society they live in,” explained Buffett. “So it stands to reason, if the society allowed you to do it, it should get something back. And that’s, very simply, the way my dad feels, is that he was lucky to be born at the time he was, and all sorts of other reasons, and so the culture he’s in should really reap the rewards of that.”

Wall Street investors were rewarded this week, as stocks traded at new highs. But one New Jersey-based stock still hasn’t fully recovered from a recent sell-off. Kenilworth-based Merck had a setback after it withdraw its application to sell a cancer treatment, Keytruda, in Europe.