BUSINESS & ECONOMY

Will a battle over tax incentives affect NJ’s second bid for Amazon?

BY Brenda Flanagan, Senior Correspondent |

Gov. Murphy gave Amazon a call soon after the corporate giant kissed-off Queens as the site of its new HQ2 — despite New York’s offer of a $3 billion tax break. New Jersey, at one point, had offered Amazon $5 billion and Newark, $2 billion more, to locate here.

“We have been in touch, and we’re continuing to be in touch,” Murphy said. “The reasons they looked at Newark, to begin with, have become only more compelling. It’s a community on the rise. It’s location is second to none.”

But Amazon bailed, after some New Yorkers balked, in part, over those billions in giveaways to the world’s third-richest company. And it’s a fight Amazon might encounter all over again here in Jersey, where local advocates and business groups are already butting heads over how to bestow state business tax breaks.

“I think New York dodged a bullet. I think New Jersey has a lot of work to do in terms of its tax incentive programs and the problems that are apparent with the previous $11 billion it’s tried to give away,” said Analilia Mejia, state director for New Jersey Working Families. “I think it’s important that if we give public dollars or public benefit to any multi-billion dollar corporation — or even any corporation — that they should actually provide a benefit for New Jersey workers.”

“We don’t need to, you know, build these incentive programs and try attract and retain businesses. If we’re going to take that sort of negative approach and have a small faction of people, you know, complain when there’s the benefit of jobs and economic development that goes with it,” said Mike Egenton, executive vice president of the NJ Chamber of Commerce.

But more states and cities are choosing to opt out of mega tax breaks as they calculate the win-loss ratios of jobs that end up costing hundreds of thousands a pop — they’re thinking twice.

“Double-clutching when they are offering Amazon or other organizations money,” said Michael Lahr, a professor at Rutgers Bloustein School of Planning and Public Policy.

Professor Lahr wrote the Bloustein report on New Jersey’s tax incentive programs, administered by the Economic Development Authority. He compared giant tax breaks to ruinously expensive special projects and sports events — with poor return on investment for states.

“They’re getting smarter. And so they’re always — things like using public monies for stadiums has already been something people are second guessing — and this has been something that’s been a momentum that’s been building over time,” Lahr said.

Murphy’s facing a political battle over how to restructure New Jersey’s tax incentives, especially in the aftermath of a scathing audit that uncovered sloppy bookkeeping by the EDA. The governor is now pitching smaller, capped tax breaks — like the historic tax credit he proposed for a legacy industrial section of Paterson today. And if Amazon picks Jersey, Murphy says the tax breaks would come with strings attached that Amazon might not accept.

“Incentives have to be transparent, accountable, and they have to work for everybody. It’s not enough that they work for the company. They’ve got to work for the community — they’ve got to work for the residents,” Murphy said.

New Jersey is already scrounging for extra income as it confronts next year’s budget. Expect lawmakers to tangle over the wisdom of offering giant corporate tax breaks.