Businesses would get tax breaks for buying products made in New Jersey, a measure that lawmakers say would encourage more spending here while boosting an economy hampered by the pandemic.
State lawmakers are also looking to enact another new policy to push for more purchasing of American-made products.
Their efforts come amid a pandemic that has ravaged both the state and national economies, and also put a strain on global supply chains.
Lawmakers earlier this month proposed a “Made in New Jersey Tax Credit” for retailers and other companies that buy products that have been made within New Jersey’s borders.
Making PPE widely available
Sponsors of the proposed tax break say it would give much-needed aid to New Jersey businesses when many are struggling to stay afloat during the coronavirus pandemic. It could also help ensure products like masks and other personal protective equipment remain widely available as the health crisis continues, they said.
“We need to do everything we possibly can right now for the business community,” said Assemblyman Brian Bergen (R-Morris).
Another bill advancing in Trenton this month would require state government to buy American-made steel and iron for major road and bridge projects. Sponsors of the “New Jersey Buy American Act” say it is part of a national push to better support American workers and manufacturers.
“I believe that we have an obligation to use public funds in ways that help our workers and businesses,” said Senate President Steve Sweeney (D-Gloucester).
Since the coronavirus pandemic took hold earlier this year and statewide stay-at-home orders were issued to help stop its spread, nearly 2 million New Jersey residents have filed for unemployment benefits, according to the Department of Labor and Workforce Development.
The state unemployment rate has also risen significantly; it measured 8.2% in October compared to 3.7% in the same month a year ago.
New Jersey economy hit hard
Some places in New Jersey have been especially hard-hit, including Atlantic County, which suffered the largest year-over-year job decrease of any county in the country between June 2019 and June 2020, according to the federal Bureau of Labor Statistics. And at 6.9%, the U.S. unemployment rate in October was nearly double the 3.5% rate measured in February just before the pandemic took hold across the country.
Meanwhile, the pandemic has also strained supply chains, resulting at times in widespread shortages of products like hand sanitizer and toilet paper.
Under the proposed “Made in New Jersey Tax Credit,” companies would be eligible to receive a credit against their state corporate-business taxes to help offset the cost of buying products where the “significant parts, processing, and labor that produce the product originate or are sourced from New Jersey.”
The tax break could be used immediately or carried forward by companies that would qualify for it, according to the bill (A-5023). It was introduced earlier this month, but has yet to come up for a vote in either house of the Legislature.
Bergen said New Jersey’s manufacturers help create “microeconomies” that support jobs and other economic activity in local communities. There is “no more important time than right now” to come up with ways to help sustain them, he said.
Establishing a new tax incentive could also make it more cost-effective for a wide range of products to be bought and sold locally, which could help make them more readily available in New Jersey, even when there are shortages elsewhere, he said.
“We can make these products locally, it’s just that there’s a lack of incentives to make (them),” Bergen said.
U.S. manufacturers for highway, bridge projects
Under the proposed “New Jersey Buy American Act,” there would be a new legal requirement that steel and iron be purchased from American manufacturers whenever the state has a contract worth over $1 million that involves the “construction, reconstruction, alteration, repair, maintenance, or improvement of any surface highway or bridge.”
Some exemptions would be allowed, including for when the state must respond to an emergency or when the purchase of U.S.-made products would “increase the cost of the contract by an unreasonable amount,” according to the bill (S-853).
The measure is modeled on a similar purchasing requirement in New York, and its adoption in New Jersey would mean it could apply to contracts awarded by the bistate Port Authority of New York and New Jersey. The bill cleared the full Senate in a 39-0 vote earlier this month but it has yet to be considered by the Assembly.
Sweeney called the American-made purchasing requirement a “matter of good economic sense.”
“This is part of a national movement in support of American jobs that will help revitalize infrastructure across the state and bolster the strength of our manufacturing industries,” he said.
The bill also has strong support from the New Jersey AFL-CIO labor organization.
“American manufacturing is the best in the world and the best investment for the American taxpayer,” said Charles Wowkanech, president of the NJ AFL-CIO. “Sending taxpayer money to another country for products we make right here at home is an insult to hard-working men and women everywhere.”