If an ongoing push to lure online retail giant Amazon into building a new corporate headquarters in New Jersey ultimately proves unsuccessful, the lack of a lucrative corporate-tax incentive package being put on the table shouldn’t be the reason why.
State lawmakers yesterday gave final approval to a tax-incentive bill that would, among other things, provide per-job tax credits worth as much as $10,000 annually to Amazon, or another company that is willing to hire at least 30,000 employees and invest at least $3 billion in a corporate headquarters in New Jersey.
The measure, which Gov. Chris Christie is expected to sign, officially follows through on an offer that legislative leaders from both parties first made several months ago in response to an announcement from Amazon that the Seattle-based company was searching for a location to build a second corporate headquarters that would have as many as 50,000 employees.
After receiving proposals from hundreds of cities and states across the country in the wake of that announcement, Amazon officials are expected to reveal their preferred location later this year.
Does it go too far?
Lawmakers from both parties said yesterday that the proposed state tax incentives will ensure New Jersey is a strong contender in Amazon’s search, and Christie has already endorsed a proposal to bring the company’s “HQ2” to Newark. But others were critical of the tax-incentive measure, saying it goes too far in the name of economic development.
Founded in 1994, Amazon was set up as an online bookseller. Since then, it has become one of the world’s largest companies, maybe its largest retailer, with more than 380,000 employees. Its current corporate headquarters in Seattle, where the company started, covers eight million square feet. And Amazon estimates the Seattle campus generates as much as $1.4 billion annually in direct and indirect economic activity for the city.
Amazon already has a pretty significant presence in New Jersey, opening more than five-million-square-feet of warehousing and distribution space in recent years as the state’s overall warehouse and distribution industry has flourished in the wake of the Great Recession. Amazon has facilities in Carteret, Florence, Logan Township, Robbinsville, and Woodbridge, and facilities are also opening in Cranbury, Edison, and Logan Township. Amazon-affiliated Audible Inc. is located in Newark.
But Christie has argued an Amazon corporate headquarters located in New Jersey could provide up to $9 billion in overall economic benefit for the state, making the incentive package an overall good deal for the state and its taxpayers. As Newark continues to move ahead with a rebirth effort linked heavily to technology, Mayor Ras Baraka has said Amazon could be a “game changer” for his city, and the surrounding region. Newark is offering local tax incentives worth as much as $2 billion, including a property-tax abatement and a waiver of the city’s wage tax, as part of the proposal it submitted to company officials in October.
Under the bill that won final passage in both the Assembly and Senate yesterday — during the final voting day of the current legislative session — the state’s existing per-job cap on tax credits would be lifted to $10,000, for up to 10 years, for “transformative headquarters” projects that create at least 30,000 jobs, and involve at least $3 billion in investment. The job-creation and investment would also have to yield a “net positive benefit to the State equaling at least 115 percent of the requested tax credit allocation amount,” according to the legislation.
The bill would also allow the tax credits that are allowed through the state Grow New Jersey incentive program to be carried forward for up to 50 years, but the company could not continue receiving tax credits if its staffing falls below 80 percent of the promised amount. The measure also calls for periodic audits of the payroll of any company receiving the tax incentives.
The legislation was passed with no debate in the Senate, but in the Assembly, two Republicans went back and forth on the merits of the incentives before it was ultimately approved by a wide margin.
“This is for one of the world’s most profitable companies, and it will benefit the world’s richest man,” said Assemblyman Jay Webber (R-Morris), referring to Amazon chief executive Jeff Bezos.
Bramnick: ‘We’re going to compete’
Webber faulted lawmakers for not doing more to help small businesses by lowering corporate tax rates across the board, and he cited a state audit released last year that raised questions about the state Economic Development Authority’s oversight of the state’s existing incentive programs.
But Assembly Minority Leader Jon Bramnick, one of the bill’s sponsors, defended the measure, suggesting the incentives will help to offset the state’s reputation for levying high taxes.
“The message we’re sending here is New Jersey is ready to do business,” said Bramnick (R-Union). “We’re going to compete.”
By sending the bill to Christie yesterday, lawmakers ensured that it will be the outgoing Republican instead of incoming Democratic Gov.-elect Phil Murphy who gets to take final action on the proposed tax credits.
While Christie has worked with Democrats in the past to update the state’s tax-incentive programs, Murphy has faulted the Republican’s handling of the state economy, and he’s specifically criticized the incentive programs for being too costly. Murphy has also promised to do other things to boost the state economy, including reemphasizing technology, workforce development, and providing free community college tuition.
Even though the current legislative session ends at noon today, Christie isn’t due to leave office until noon on January 16, giving him another week to review the bills that received final approval during yesterday’s voting sessions.