Thread by @Pat_Garofalo

The big report on New Jersey's tax incentive programs from Gov. Murphy's office is finally out! I'm going to be tweeting some highlights in a thread. Buckle up. politico.com/states/f/?id=0…

First, here's a piece I did for @thenation on why this investigation is a big deal. thenation.com/article/new-je…

OK, now to the report. Here's the first big finding: "special interests—in the form of a law and lobbying firm and the clients on whose behalf it apparently operated—appear to have had a significant impact on the design of the Grow NJ statute," one of the tax break programs.

Oh good: "a statutory provision related to grocery stores in Camden appears to have
been drafted to permit a particular grocery store to obtain tax incentives, while prohibiting a competitor grocery store from obtaining such benefits"

On pages 3-4, we learn that the state economic development agency didn't really train workers on how to vet tax break applications, Leading to "confusion over even the basic level of scrutiny to be applied to applications."

Investigators used Google when the economic development agency did not: "A simple internet search revealed that one company, Holtec International, had been debarred by the Tennessee Valley Authority, even though Holtec said it had never been debarred in its Grow NJ application."

On page 4, investigators again did a simple internet search to find 3 companies that claimed tax credits with threats to move out of state, even though they had committed to staying in the state a full year earlier.

Page 5 has a real doozy: A company called Cooper Health said on one application that it was not considering a move out of the state, then came back with a second application claiming that it was, and received $40 million in tax incentives to stay.

What changed? ¯\_(ツ)_/¯

Whoa, the report claims some $500 million in tax incentive awards that are suspect. That's real money! (Page 6, for those following along.)

🔥🔥: "Certain aspects of the Grow NJ program’s design are difficult to justify from a rational policy perspective and can be understood only as the result of a process in which certain favored private parties were permitted to shape the legislation to their benefit" (page 13)

Page 14 straight up says New Jersey's tax incentive programs may violate the state constitution because they were explicitly designed to benefit specific companies and harm others

Read page 17-18 for a gross example of how the legitimate goal of getting grocery stores into the food desert of Camden, NJ, was warped to help one client of a well-connected law firm, and wound up with no new stores going to Camden.

Cost per job is not always the best way to measure incentives, but I think we can agree that $340,000 per job created, which was how one program shook out (page 21), is too much.

Also on page 21, we have a lobbyist inserting into the tax incentive program a provision benefiting projects on piers. One of his clients was building a new office building on, you guessed it, a pier.

On page 30-31, we have the economic development agency changing regulations outside the regulatory comment period at the behest of a law firm -- whose client, a hospital, then claimed a $40 million tax break it might otherwise not have received.

Page 31 also has the tale of a company, World Business Lenders, laying off a bunch of people and still receiving tax breaks pegged to job creation, even though the state economic development agency knew the layoffs had happened. Good times.

Page 54 is the real good stuff: An email from a company, Cooper Health, looking for a site in Philadelphia that it could threaten to move to in order to get tax breaks, when it had no intention of actually moving.

"As part of our EDA application we need a term sheet for a potential location outside of NJ. I need a credible location that is LESS expensive ... can you get me a term sheet for 120k sf? Quietly? No probability of us moving to Center Sq, so I don’t want to make too much noise"

So the whole "threat" to move outside of New Jersey was a sham. The company got $40 million in tax breaks to stay in the state.

If it hadn't threatened to move, the company would have been eligible for just $7 million of that. So it ginned up a sham other location to access the rest of the $$.

To sum up, the report lays out two big issues: 1) how politically connected lobbyists crafted New Jersey's tax incentive programs to explicitly help their clients and 2) how companies gamed those programs to get tax breaks they didn't actually qualify for

It's a huge credit to the Murphy administration for fighting to get all this info out to the public. These problems are not unique to New Jersey, but because so many of these tax incentive deals happen behind closed doors, we never know how truly corrupt they are.

I guess at this point I should plug my book to anyone who made it this far in thread. I wrote all about how and why corporate tax break deals only work for politicians and wealthy elites: us.macmillan.com/books/97812501…

And of course, the NJ political machine is out to stop all this info from becoming public. The only reason this big report dropped is because a judge shut down efforts to keep it hidden: nj.com/politics/2019/…

And with that, the thread is over! But hit me up with any questions on this or any other corporate tax nonsense you see out there.