Majority of Companies That Would Pay the Corporate Transit Fee Are From Out-of-State
For Immediate Release

May 14, 2024 – More than four out of five corporations that would pay the Corporate Transit Fee proposed by Governor Murphy are headquartered outside of New Jersey, according to state Treasury data obtained by New Jersey Policy Perspective (NJPP).

The data was released in a new report, Very Big, Very Few, and Far Away: Majority of Companies That Would Pay the Corporate Transit Fee Are From Out-of-State, authored by NJPP Senior Policy Analyst Peter Chen.

The report finds that the governor’s plan to fund NJ Transit would only target the top 0.5 percent of corporations filing taxes in New Jersey, or roughly 600 out of more than 116,000 corporate filers. Among the corporations that would pay the fee, 81 percent are out-of-state and multinational companies. These findings refute claims by corporate lobbyists that the proposed fee would primarily be paid by New Jersey businesses and hurt the state’s competitiveness.

“This data shows that the Corporate Transit Fee is incredibly targeted. We’re talking about corporate giants like Amazon and Walmart, not mom-and-pop,” said Peter Chen, NJPP Senior Policy Analyst and report author. “The way that the fee is designed, it primarily affects very big and mostly out-of-state corporations, not small or midsize or even most large businesses here in New Jersey. Tax policy can be complicated at times, but this is a real no-brainer.”

The report further debunks claims that the fee could harm New Jersey’s business environment and competitiveness. Over the last six years, the same corporations targeted by the fee were paying the same tax rate under the now-expired Corporation Business Tax surcharge.

With the corporate surcharge in place, corporate profits hit record highs in New Jersey, and corporate tax revenue more than tripled between 2017 and 2023, from $1.7 billion to over $5.3 billion. During this same time period, New Jersey’s corporate tax collections increased about three times more than in neighboring Pennsylvania, a state with lower corporate tax rates.

The Corporate Transit Fee is a 2.5 percent fee on corporate tax filers with more than $10 million in annual profits. Because the fee is based on profits generated in New Jersey, and not just on corporations headquartered in the state, it will primarily be paid by out-of-state companies, even if they do not have a physical presence or employees in the state.

“Regardless of what business lobbyists say, the evidence is clear. A modest tax on the most profitable corporations will not hurt their bottom line or their ability to make record profits,” said Peter Chen. “It’s in everyone’s best interest for these corporations to help fund vital infrastructure that we all benefit from.”

The report concludes that the Corporate Transit Fee is both fiscally responsible and the fairest way to fund NJ Transit, ensuring that corporations benefiting from New Jersey’s consumer base contribute to the state’s public services.

Without stable state funding and with federal pandemic aid about to expire, NJ Transit faces a roughly $800 million budget deficit, even after the agency approved a 15 percent fare hike earlier this year. The proposed Corporate Transit Fee would raise approximately $1 billion annually for NJ Transit, saving the agency and its riders from drastic service cuts. The agency is currently the only one of its kind in the nation without a dedicated source of public funding.

Read the full report online here.

Read the full report as a PDF here.

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New Jersey Policy Perspective (NJPP) is a nonpartisan think tank that drives policy change to advance economic, social, and racial justice through evidence-based, independent research, analysis, and advocacy.