BUSINESS & ECONOMY

Business Report Plus: Murphy challenges SALT deduction

BY Rhonda Schaffler, Correspondent |
  • Gov. Murphy joins New York and Connecticut governors in suit challenging SALT cap
  • Companies work to see how changing tax rates will affect them
  • Celgene announces a $9 billion acquisition of Juno Therapeutics
  • Health care start-up launches in Union with the goal of fighting antibiotic resistance
  • Most New Jersey residents think health care insurance remains too expensive
  • Murphy nominates a new CEO to run the state’s Economic Development Authority
  • A bill that would expand urban enterprise zones to 37 municipalities cleared Senate committee
  • Toys R Us, JC Penney and Newell Brands announce store closures
  • U.S. economy slowed to a growth of 2.6 percent in the most recent quarter

The new federal tax law has been in effect for less than a month and already its going to face a potentially high-profile lawsuit. On Friday, Gov. Phil Murphy said that the state will join New York and Connecticut in a suit that will challenge the constitutionality of a $10,000 federal cap on deductions for property taxes and state taxes, or SALT. In a conference call with reporters, the governors of New Jersey, New York and Connecticut said the lawsuit will be filed within the next few weeks and may argue that the law interferes with states’ rights under the U.S. Constitution. Murphy told reporters that limiting SALT deductions was a “politically motivated” attack on blue states. Having reported a lot about the tax law, all I can say now is: stay tuned.

We continue to see some companies hand out bonuses or pay raises to their employees in response to the fact that their tax rates have been lowered. This week, Home Depot, Starbucks and JP Morgan Chase were some of the companies that made such an announcement. Companies are also trying to work out exactly how they’ll be impacted by changing tax rates. For instance, New Brunswick-based Johnson & Johnson said it had to take a one-time charge against its earnings to account for some tax law changes, and that resulted in a reported quarterly loss of $10.7 billion. This is really just accounting noise. The health care giant said its new lower corporate tax rate will lead to more research and development in the U.S.

It was a big week for news in the health care sector in our state. For instance, biotechnology company Celgene, which is based in Summit, announced a $9 billion acquisition of Juno Therapeutics. The deal gives Celgene access to Juno’s treatment for blood cancers.

Also this week, a health care start-up called Procaryotiks launched in Union. Founded by some senior scientists from Merck, this company will work on developing new drugs to fight the serious problem of antibiotic resistance.

A new study came out that found most New Jersey residents think health care insurance remains too expensive, even though they remain satisfied with the level of care they are receiving. Correspondent Briana Vannozzi took a closer look at this.

And in case you missed it, Murphy signed an executive order directing states to find ways to expand patient access to medical marijuana. He also nominated a new CEO to run the New Jersey Economic Development Authority. Tim Sullivan comes to the Garden State after stints in development for both the state of Connecticut and New York City. The move comes shortly after Murphy ordered an audit of EDA tax incentives. There’s been criticism over the state’s return on those incentives.

In the meantime, a bill to expand New Jersey’s urban enterprise zones cleared a Senate committee. Under the bill, the urban enterprise zone designation is expanded to 37 municipalities in the state. This program provides incentives to encourage businesses to locate and hire workers in economically challenged cities.

A few New Jersey businesses face their own challenges. Wayne-based Toys R Us plans to close 12 of its 32 New Jersey stores as it continues to reorganize after filing for bankruptcy protection. The troubled retailer is closing a total of 182 stores nationwide, or 20 percent of its locations.

Another struggling retailer, JC Penney, announced it will close its store at the Westfield Garden State Plaza in Paramus in March. That store had been the mall’s anchor for 60 years.

Newell Brands, a global consumer goods company headquartered in Hoboken, announced a major restructuring this week and it may end up closing up to half of its factories. Newell is the name behind such well known brands as Rubbermaid, Mr. Coffee, Sunbeam and Yankee Candle, just to name a few.

Kudos to a few Garden State companies who have landed on Fortune’s 50 Most Admired Companies in the World List. Johnson & Johnson was 17th on the list. BMW, which has its North American Headquarters in Woodcliff Lake, was ranked 19th. Unilever, based in Englewood Cliffs, was ranked 44th.

In terms of what’s happening outside of New Jersey, we learned on Friday that the U.S. economy slowed to a growth of 2.6 percent in the most recent quarter. But that report showed consumer spending has picked up. Consumers certainly are buying stocks.

On Wall Street, new records were set once again this week.