OT - Business tax incentives to get jobs to NJ (JP Morgan 2150 jobs)

[RUfinal4]

I was reading the following article on NJ.com and started to think.

JP Morgan moving 2150 jobs to Jersey City
http://www.nj.com/hudson/index.ssf/..._to_jersey_city_report_says.html#incart_river

Does it make sense to give business tax incentives to get jobs to NJ? I am no expert on business taxes but if all the 2150 jobs came from NY or another state than this can be very good for NJ.

It says the avg salary of the jobs moving is $165k

Based on the NJ Tax rate schedule that means the state will collect about $8300 in state taxes from each employee or a total of about $18 mil.

State tax rate schedule
http://www.state.nj.us/treasury/taxation/pdf/current/njtaxratesch.pdf

In addition to the income tax, some of these employees that currently don't live in NJ will want to move to NJ. Just say some live in Westchester or CT where the commute will get very bad to Jersey City or even some of the LI folks. This may lead to some higher demand for properties in some NJ towns.

Each of these 2150 individuals will be buying some small items in Jersey City now (ie. drinks, food, drug store items, etc..) that the state will collect 7% tax on. It may not be big money but certainly helps.

 

[mdk01]

You have to add something else to your analysis. By moving these employees to New Jersey, JPM would potentially increase the amount of corporate income taxes they pay to NJ. Multistate corporations generally determine how much tax is paid to each state by a 3 factor allocation. The 3 factors (there are difference between states) generally are:

1. In-state payroll vs. total payroll

2. In-state revenue vs. total revenue, and

3. In state assets (property, equipment, an adjustment for rent paid) vs. total assets.

NJ's allocation factor will clearly go up

New Jersey is really behind the 8 ball in attracting corporate businesses into the state given it's very high corporate tax rate along with high cost of living for employees. The tax incentives look like they are intended to reduce or eliminate the negative corporate tax environment while providing NJ the tax benefits of 2100 high paid employees. And while some of them already live in NJ (which actually is a positive for moving to Jersey City), their payment of non-resident New York State income tax has vastly reduced the amount of taxes New Jersey collects from them. So. despite the tax incentives, this will almost certainly be revenue positive for the state.

BTW - Want a further incentive for businesses to relocate to New Jersey, cut personal tax rates so it's not the 2nd or 3rd worst state in the country for personal income tax.

 

[vkj91]

depends on who you ask/believe.

 

[BigLou]

You have to add something else to your analysis. By moving these employees to New Jersey, JPM would potentially increase the amount of corporate income taxes they pay to NJ. Multistate corporations generally determine how much tax is paid to each state by a 3 factor allocation. The 3 factors (there are difference between states) generally are:

1. In-state payroll vs. total payroll

2. In-state revenue vs. total revenue, and

3. In state assets (property, equipment, an adjustment for rent paid) vs. total assets.

NJ's allocation factor will clearly go up

New Jersey is really behind the 8 ball in attracting corporate businesses into the state given it's very high corporate tax rate along with high cost of living for employees. The tax incentives look like they are intended to reduce or eliminate the negative corporate tax environment while providing NJ the tax benefits of 2100 high paid employees. And while some of them already live in NJ (which actually is a positive for moving to Jersey City), their payment of non-resident New York State income tax has vastly reduced the amount of taxes New Jersey collects from them. So. despite the tax incentives, this will almost certainly be revenue positive for the state.

BTW - Want a further incentive for businesses to relocate to New Jersey, cut personal tax rates so it's not the 2nd or 3rd worst state in the country for personal income tax.

You are behind in your CPE. NJ has moved to a single factor formula for calculating State Income Tax - Sales within NJ versus total sales. This is the trend nationally. Not sure how moving employees to NJ for this type of business approves the allocation factor.

That said, if the reported numbers are correct then it is still a good deal.