A bill (S1540/A3143) that’s been passed unanimously in both the state Senate and the Assembly will allow companies to consolidates tax liabilities across different businesses and carry them forward for 20 years. The state Division of Taxation estimates that this bill will cost NJ taxpayers at least $375 million a year beginning in 2012 and could easily cost more.
State law currently prohibits someone from using a loss from one business against a profit from another for a tax advantage. It also prohibits carrying business losses forward into other years.
In a statement accompanying the proposed legislation, the Senate Budget and Appropriations committee called the current system inflexible and a “deterrent for growth and development” due to the way the state taxes “gross income” rather than the federal definition of “taxable income.” Supporters of the bill also say that neighboring states like New York, Pennsylvania, Delaware and Connecticut allow tax liabilities to be carried forward into the future.
Nevertheless, New Jersey Policy Perspective, a Trenton-based research firm, questioned whether the bill was simply an example of corporate welfare. “When times are tough,” read a statement from the organization, “fiscal discipline should apply to everyone, not just those with a voice in the state capitol.”