Tax Breaks

The home delivery service goPuff failed to disclose a federal labor law violation to New Jersey officials when it applied for a $39 million corporate tax break last summer, a warehouse workers union said.

It is the latest example of a company facing scrutiny for its application to the controversial Grow New Jersey tax incentive program, which is currently under investigation by a state task force that found it lacked oversight.

Boosters and critics of New Jersey’s controversial tax incentive program came out to speak Tuesday during a public hearing in Trenton held by the state task force investigating the programs.

Gov. Phil Murphy created the task force to look into a system he said lacked oversight under the previous administration and needs to be overhauled.

Several speakers at Tuesday’s hearing agreed with Murphy’s position, but others said the generous tax incentives have helped lure businesses to some of New Jersey’s most distressed cities that would have otherwise lacked development.

Gov. Phil Murphy said he will let two controversial New Jersey tax break programs expire without signing a bill to extend them while lawmakers and the front office work on a new law that will lay out the rules of future incentives.

It comes after a state task force convened by Murphy to investigate the tax break program found evidence that companies may have lied on their applications and that politically-connected insiders likely helped write the law to benefit their clients.

The New Jersey Economic Development Authority has asked for more information from six companies that received state tax breaks, including several that a task force found may have misled regulators on their applications.

State officials want “to afford the companies the opportunity to respond in writing to a range of recent developments, including last week’s report from the Task Force on NJEDA Incentives and a recent legal settlement,” the authority said in a press release Wednesday morning.

A New Jersey task force examining the state’s tax break programs said special interests had an outsized role in writing the 2013 law that significantly expanded incentives for companies.

It also found that the Economic Development Authority did not have proper oversight over the program, which has awarded around $11 billion to attract businesses in the state.

The task force convened by Gov. Phil Murphy released its first report Monday night after a New Jersey judge ruled to allow the investigation to continue and the report to be published.

The New Jersey Tax Incentive Task Force, a group formed by Gov. Phil Murphy to look into the state’s $11 billion tax break programs, kicked off its first public meeting Thursday with testimony from a whistleblower who said her former employer lied to get a lucrative tax break — and kept it, despite failing to meet the requirements of its agreement.

Gulsen Kama, a former high-level employee at the tax preparation company Jackson Hewitt, said the firm falsely claimed it was considering leaving New Jersey to secure a tax break meant to keep jobs in the state.

New Jersey Gov. Phil Murphy has been slamming the state’s tax break program after an audit showed that companies were receiving incentives — possibly without meeting the benchmarks in their agreements.

But in testimony before the state Legislature Monday, the state comptroller assured lawmakers that the much-discussed audit did not prove that any companies violated their pacts to create or retain jobs.

It only showed, according to Comptroller Philip Degnan, that the state’s Economic Development Authority failed to ensure that some businesses were in compliance.

During his first State of the State speech earlier this week, New Jersey Gov. Phil Murphy highlighted his administration’s recent audit of the state’s tax break program.

He criticized lax oversight at the Economic Development Authority and said the money could have been better spent elsewhere.

More than just bashing enforcement of the incentives, Murphy criticized the law itself.

“The audit revealed bad policy, badly run, a program more likely to have been drawn-up in a smoke-filled back room than created for New Jersey’s future,” he said Tuesday.

N.J. tax-break programs poorly monitored, audit finds

Jan 10, 2019

An audit critical of the New Jersey Economic Development Authority’s tax incentive programs found a lack of oversight and few policies to ensure that companies make good on promises outlined in their tax break agreements.

The EDA failed to verify that businesses honored their job commitment goals, the audit found, meaning the state could not be sure it was getting the economic benefits it had anticipated.

In a sampling of companies that received tax breaks, the N.J. State Comptroller’s office was unable to verify if 20 percent of the promised jobs had been created.

Advocates for opposite sides of the political spectrum are urging New Jersey lawmakers not to approve subsides to get Amazon to consider locating its second headquarters in the state.

Jon Whiten with New Jersey Policy Perspective says offering Amazon huge subsidies distorts the state’s tax policy and economic development efforts.

“With a proposal like this and $7 billion in tax breaks we’re acting as if we’re South Dakota, we’re begging companies to come here. We’ve got a lot of other reasons for companies to want to be here.”