There are plenty of reasons to dislike New Jersey’s Urban Transit Hub Tax Credit Program, especially if you live at the shore.
For starters, the program in two years has lavished more than $1 billion from taxpayers — you included — on businesses and cities far from the shore.
Even in New Jersey, a billion is a lot of money. A plan to restore property tax rebates, for example, failed because elected officials couldn’t come up with $800 million.
The $1 billion transfer from taxpayers to corporations in certain cities hasn’t gotten a lot of attention because it’s a tax expenditure — spending on companies by letting them skip paying the taxes they’d owe.
But the result for taxpayers is the same, and the $1.03 billion will be covered by everyone else (unless the state budget is cut by the same amount — in your dreams).
Companies get the money by building commercial projects in nine cities, with Camden being the only one in South Jersey. The others are: Newark, Hoboken, New Brunswick, East Orange, Paterson, Elizabeth, Jersey City and Trenton.
The dozen corporations that have gotten three-quarters of the money to offset their development costs include Panasonic ($102 million), Ahold ($35 million), Prudential ($211 million), Wakefern ($87 million), Goya Foods ($82 million) and Campbell Soup ($34 million). They seem to me to be giant firms quite capable of handling their capital projects on their own.
The other quarter of the money has gone to seven limited liability corporations to build housing in the cities.
The fig leaf covering this transfer of taxpayer wealth to corporations is the notion that development needs to be encouraged near mass transit — as if mass transit access wasn’t already a plus for nearly all forms of development.
To qualify, projects must be within a half-mile of an NJ Transit, PATH, PATCO or light rail station in the designated cities. Except for Camden, where it can be within a mile, which makes me wonder if that extension was written to benefit a particular company.
Even the mass transit requirement isn’t really a requirement. Companies can also get a tax credit for up to 100 percent of their capital costs if their buildings are adjacent to a freight line. They don’t even have to use the freight line, just be next to it.
The Urban Transit Hub Tax Credit Program looks like it will end this year, but unfortunately it and four other tax incentives are just being combined into new and probably more expensive programs under the New Jersey Economic Opportunity Act working its way through the Legislature.
I’ve never heard a strong case for why government should decide where private companies should invest money, which is what such subsidies entail.
Government and the politicians who run it love to hand out large amounts of other people’s money. Nothing is more effective for helping your friends and punishing your enemies.
But why does the business community support this?
State business organizations rightly complain about the lousy business climate in New Jersey — second worst in the nation, according to the Tax Foundation — and relentlessly urge state officials to get spending under control.
Except when that spending is lavished on corporations.
These types of subsidies make businesses seem no more principled than any other interest group — seniors, educators, unions, etc. — that wants efficient government dedicated to the public good, except in their own cases.
Manufacturers in the region reported business activity stabilized in March after dropping in February.
The Federal Reserve’s Business Outlook Survey of manufacturers in southern New Jersey, eastern Pennsylvania and Delaware found slightly more reporting increasing than decreasing business levels.
The prior month, reduced business activity outnumbered increased activity by 13 percentage points.
Manufacturer optimism remained the same, with 46 percent expecting better conditions in six months vs. 13 percent who expect worse.
A smaller margin — 24 percent vs. 16 percent — expect to have more employees in six months.
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