NJ businesses get a break on taxes

Over the years, New Jersey's leaders have been criticized for taxing anything they can, but the state's businesses are about to get a break.

Gov. Christie on Thursday signed into law two changes in the tax code that had been championed for years by the business community and this year finally won support from legislators of both parties.

The first bill, S2753, would base a corporation's income tax liability solely on sales, rather than the traditional three-factor formula that also takes into account a company's payroll and property in the state. That would put New Jersey on par with about two dozen other states that have what's known as a single-sales factor, including Pennsylvania - which is phasing it in - and New York.

The measure mainly benefits multi-state corporations that are based in the state and sell to a national or global market. It doesn't affect businesses that have all of their employees, property and sales in New Jersey. Critics of the old formula said it taxed companies that hired and expanded in the state higher than it did businesses with most of their employees and property outside of the state.

The second bill signed by Christie, S2754, allows small businesses that do not file through the corporate tax code to offset losses in certain business-related categories of gross income against gains from others. The legislation also allows them to carry forward those losses on their taxes for 20 years.

"It's important to bring the right signal to businesses here and out of state that New Jersey's getting back in the game and we're going to be a mainstream tax state," said Phil Kirschner, president of the New Jersey Business and Industry Association.

The Republican governor vetoed the bills passed by the Democratic-controlled Legislature in January, voicing concern they were not enacted in concert with the state budget. He introduced them in the $29.4 billion spending plan announced several days later.

New bills were subsequently passed to meet Christie's conditions.

"Today, we are providing critical tax reforms and incentives to boost our economy, foster job growth and opportunity for New Jersey families, and putting a down payment on a more prosperous future for our state," Christie said in a statement.

Phasing in the single-sales factor would result in $24 million in foregone revenue for the 2012 fiscal year that starts in July and $98 million by 2016.

The bill for small businesses would lead to $23 million in lost revenue for 2012 and $200 million by 2016.