Last week, when Mercedes-Benz announced it was moving its U.S. headquarters from Montvale, New Jersey, to Atlanta, it added more evidence to the notion that when it comes to attracting and retaining business, New Jersey is on two different tracks.
Here is a look at the issue.THE TAXES
New Jersey has the nation’s highest property taxes. The Tax Foundation ranked it last year as the second-worst business climate among states – largely because of the tax burden.
The Democrat-controlled Legislature and Gov. Chris Christie, a Republican, have often been at loggerheads over taxes. Christie has repeatedly rejected efforts to raise the income taxes on high earners; lawmakers refused to go along with his tax-cut plan in 2012.
WHAT TAXES MEAN FOR BUSINESSTaxes are a factor for businesses deciding where to locate. But just how important they are depends on whom you ask. Some experts say businesses don’t mind paying relatively high taxes so long as they feel there’s a good return on them, such as good roads and quality schools, which help attract employees and educate the next generation of workers.
After Mercedes announced it was moving its U.S. headquarters – though it is keeping some operations in New Jersey – a Christie spokesman said that the move “reinforces Governor Christie’s repeated calls to lower taxes and change the business climate if we are to keep more jobs in New Jersey and attract new ones.”
WHO’S LEAVINGIn the last few years, Bergen County, next to New York City, has had some of New Jersey’s highest-profile corporate departures. Besides the Mercedes-Benz headquarters and its 1,000 jobs, the Hertz Corporation, the rental car company; and Sealed Air Corp., makers of Bubble Wrap; have announced plans to leave New Jersey for the South.
WHO’S COMING, AND WHO’S STAYING
Largely as a result of a 2013 law to set up a new system of incentives for businesses, Camden, one of the nation’s most impoverished cities, has become attractive. Subaru decided to move its U.S. headquarters there from Cherry Hill after also considering a site in Philadelphia. Holtec, a nuclear power plant components maker, is also moving there. The Philadelphia 76ers are putting their offices and practice facility in Camden, too – all with the help of state tax breaks passed by the Legislature and signed by Christie.
IS THERE A PROBLEM WITH THAT?That 2013 business incentives law was designed to keep and attract businesses and particularly help the state’s struggling cities. There are more incentives to move to Camden, a city in dire need of jobs, than anywhere else. Last year, firms planning moves to Camden received promises of future state tax breaks of more than $600 million. Firms doing business in Bergen received pledges of about $70 million. (To be fair, the American Dream retail project in Bergen County received a pledge in 2013 of $390 million – the biggest such incentive ever in New Jersey.)
Assemblywoman Holly Schepisi, a Republican whose district includes Montvale, says the urban-favoring structure hurts her area, further allocating money it pays to other areas of New Jersey. She voted against the bipartisan economic development bill in 2013 for that reason.
Bergen County – which has the biggest population in the state – pays the most taxes. And by some measures, it gets less back from the state than other place. For instance, its 70 school districts- most of them relatively small and well-off – are getting just over $200 million in state subsidies this year. Several individual school districts get more than that.
