Former state Treasurer Andrew Sidamon-Eristoff said on Mar. 18 that the governor’s proposed $60.7 billion state budget would reverse key business tax reforms enacted in 2011, which were designed to make New Jersey more competitive with other states.
The discussion centers on the alternative business calculation, a provision allowing taxpayers with income from different business entities to offset gains and losses. Governor Mikie Sherrill has proposed significant changes to this calculation in her fiscal 2027 budget, describing them as efforts to close corporate tax loopholes. Sidamon-Eristoff, who served under the Christie administration when the reforms were introduced, disagreed with this characterization.
“The alternative deduction is not a corporate tax loophole,” he wrote. “Aside from the obvious fact that the intent of the proposed change is to raise more revenue — estimated at $120 million for the fiscal year that starts July 1 — the governor’s characterization of the deduction’s original purpose is not quite true.”
Sidamon-Eristoff explained that before 2011, New Jersey’s gross income tax rules prevented business owners from offsetting gains and losses across different types of businesses, unlike federal policy and practices in other states. He said this restriction was seen as unusual and discouraged new business growth: “Business interests had long cited this restriction as both highly unusual and a significant disincentive to creating and growing new businesses in New Jersey.” The 2011 law allowed taxpayers to carry forward losses for up to 20 years but capped savings at half of what unlimited netting would provide.
Under Sherrill’s proposal, these caps would be reduced further: savings would drop from 50% to 25% for businesses earning between $500,000 and $1 million in gross income, while those above $1 million would lose the deduction entirely. “In the real world, businesses with $500,000 or even $1 million in gross revenue are hardly large businesses,” Sidamon-Eristoff said. “By the administration’s numbers, the proposed change would cost approximately 10,000 New Jersey taxpayers an average of $12,000.”
The debate comes as organizations such as the New Jersey Business and Industry Association represent employers across various sectors throughout New Jersey. The association aims to advance its members’ competitive excellence and financial success while providing essential information and services according to its official website. Michele Siekerka serves as president and chief executive officer according to NJBIA. The group also facilitates partnerships among businesses, government entities, and academic institutions according to its official website, offering advocacy and cost-saving benefits for private-sector employers statewide.
