(TRENTON) – Legislation sponsored by Assembly Democrats Joseph Lagana (D-Bergen/Passaic), Tim Eustace (D-Bergen/Passaic) and Eric Houghtaling (D-Monmouth) to help cultivate small businesses growth in the state was released Thursday by an Assembly panel.
The bill (A-2215) would establish a small business job creation and preservation account program to incentivize small business workforce expansion in New Jersey using income tax exclusions for interest under the corporation business tax (CBT) and gross income tax (GIT).
“It is the small mom and pop shops that keep local economies going,” said Lagana. “By helping our small business grow, we are not only helping our small business owners, but the municipalities where they are located, and local residents who will benefit from the new jobs created.”
“Small businesses are critical to the economic well-being of our municipalities and our state,” said Eustace. “This program will help invigorate our small businesses and create much needed jobs. With job growth in the state stagnant, anything we can do to encourage job creation is a good thing.”
“The state has passed a series of incentives for New Jersey’s largest corporations. It is only right that we do the same for our small businesses,” said Houghtaling. “If we want to improve our economic outlook, we have to support all job creators in the state.”
The bill’s small business job creation and preservation account program would allow taxpayers to earn tax-free interest on account balances subsequently used to create or preserve full-time jobs in New Jersey.
The bill would limit the availability of the program to small businesses independently owned and operated, not dominant in their field, employing no more than 100 employees, and without a state tax assessment associated with fraud or negligence.
To qualify for the bill’s exclusion, small business job creation and preservation account balances must be used for business expenditures directly supporting the compensation of either: (1) new full-time workforce positions in this state; or (2) existing full-time workforce positions in this state, in the presence of significant financial challenges.
Additionally, fund balances must be expended before the end of the third full tax period following the account’s initial deposit for CBT taxpayers and the second full tax period for GIT taxpayers. The variance owes to the underlying taxes differing administrative requirements. Noncompliance with the expenditure requirements, result in inclusion of all previously excluded interest amounts for the tax year of noncompliance.
The bill would also empower the Director of the Division of Taxation, in consultation with the Executive Director of the New Jersey Economic Development Authority, to adopt regulations to implement the bill.
The bill’s exclusion is scheduled to apply to tax years beginning on or after the date of enactment.
The bill was released by the Assembly Commerce and Economic Development Committee.