Assembly Commerce and Economic Development Committee Statement to Assembly, No. 2624 (March 5, 2020)

Summary

An Assembly Commerce and Economic Development Committee Statement to Assembly, No. 2624 with committee amendments, State of New Jersey, dated March 5, 2020, reporting Assembly Bill No. 2624 favorably, with committee amendments. As amended, the bill would establish the manufacturing reinvestment account program for small manufacturing businesses that have 50 or fewer employees. Under the program a business may deposit up to $100,000 in a manufacturing reinvestment account annually for up to five years. The committee amended the bill to expand the types of financial institutions that may hold an account and to direct the Department of the Treasury to establish a process to qualify manufacturers.

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ASSEMBLY COMMERCE AND ECONOMIC DEVELOPMENT
                COMMITTEE

                          STATEMENT TO

                     ASSEMBLY, No. 2624
                        with committee amendments



       STATE OF NEW JERSEY
                           DATED: MARCH 5, 2020

          The Assembly Commerce and Economic Development Committee
      reports favorably Assembly Bill No. 2624, with committee
      amendments.
          As amended, this bill would establish the manufacturing
      reinvestment account program for the purpose of making it easier
      for New Jersey’s small manufacturing businesses to invest in
      manufacturing machinery and equipment, and in workforce
      development. The bill would incentivize capital investment and
      workforce training in New Jersey through the use of tax reductions,
      deferrals, and deductions.
          The program would be available to manufacturing businesses that
      are current on their State tax obligations and which have 50 or fewer
      employees.
          The bill establishes three types of incentives for qualified
      businesses through the gross income tax and the corporation business
      tax:
          (1) a tax deduction for amounts deposited in a manufacturing
      reinvestment account for future use on qualified capital purchases and
      workforce training;
          (2) deferred taxation on account earnings; and
          (3) a rate reduction for the earnings on account deposits, upon
      distribution.
          Under the program, a small manufacturing business may deposit
      up to $100,000 in a manufacturing reinvestment account annually
      for up to five years. Earnings in an account are not taxed until
      withdrawn. For withdrawals made during an account’s five-year
      life for spending on New Jersey based manufacturing equipment,
      machinery, or workforce development, the business would receive a
      one-half rate reduction on the withdrawn account earnings.
      Nonqualified withdrawals are included in whole in taxable income
      without the rate reduction on earnings.
                                 2

COMMITTEE AMENDMENTS:
    The committee amended the bill to: (1) expand the types of
financial institutions that may hold a manufacturing reinvestment
account; (2) direct the Department of the Treasury to establish a
process to qualify manufacturers to participate in the program; and (3)
make a technical correction.


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