A two bill package sponsored by Assemblyman Joseph Lagana to improve the business climate in New Jersey and inspire entrepreneurship was advanced by an Assembly panel on Monday.
“Much attention has been devoted to the fact that New Jersey’s economic recovery has lagged far behind neighboring states and the nation as a whole since the recession,” said Lagana (D-Bergen/Passaic). “The only way to firmly put this saga behind us is to create incentives for established businesses to stay and grow in New Jersey and for new ones to set up shop and flourish.”
The first bill (A-4296) would reduce the sales and use tax on certain goods manufactured or distributed in New Jersey from the current 7 percent to 4.5 percent, effectively reducing the sales tax on those goods by 65 percent.
“This bill is designed to boost the allure of companies that are currently headquartered in New Jersey and incentivize other companies to move their headquarters to the state by making products they manufacture or distribute less costly to New Jersey’s consumers,” said Lagana.
The exemption applies to sales of tangible personal property and certain digital products that are manufactured or distributed by a business that maintains its headquarters in New Jersey. In order to benefit from the exemption, purchasers would be required to file a claim with the New Jersey Division of Taxation for a refund of 65 percent of the sales or use tax paid, within three years of the date of payment of the tax with all required receipts.
The bill also provides certain small businesses with a corporate business tax or gross income tax credit for the purchase of goods manufactured in the state or agricultural produce grown, produced, or processed in the state, if they are used as inputs, raw materials, or components of the final product or service offered by the small business.
The second bill (A-4297) would allow exclude certain capital gains and allow closely held businesses to carry forward a loss from the sale of the business over the next 20 years.
The carryforward would apply to the first $1 million realized on the complete disposition of a business entity with a majority interest of five or fewer individual taxpayers.
“The purpose of this bill is to encourage entrepreneurship by adjusting the gross income tax liability to better reflect the real costs of the economic transaction,” added Lagana.
Both bills were approved by the Assembly Commerce and Economic Development Committee.