New Jersey Law Will Give ‘Angel Investors’ Bigger Tax Breaks

CEDAR GROVE, NJ — A pair of Republican lawmakers who represent Cedar Grove are among the sponsors of a new law that will give “angel investors” bigger tax breaks to bring their money to New Jersey.

Under A-5604/S-2298, the angel-investor tax credit will be boosted from 10 to 20 percent, according to a statement from Assemblyman Christopher DePhillips, one of the bill’s sponsors along with Senator Kristin Corrado.

Both DePhillips and Corrado represent the state’s 40th District, which includes Cedar Grove as well as towns in Bergen, Morris and Passaic counties.

The bill gained bipartisan support from Republican and Democratic party members in the New Jersey Legislature before Gov. Phil Murphy signed it into law on Sunday.

Here are some more details about the new law, according to a statement from DePhillips:

“To qualify for the tax credit, the emerging technology business must employ fewer than 225 employees and at least 75 percent must work in the state. If the start-up is located in an opportunity zone, low-income community, or is a minority or women-owned business, the tax credit is increased to 25 percent. The maximum allowed credit is $500,000 for each qualified investment and the program is capped at $25 million annually.”

“Emerging technology businesses and angel investors are creating jobs and opportunities. It’s important we work to keep these innovative companies in our state,” DePhillips said. “New Jersey is in a tough battle with Massachusetts, New York, Pennsylvania, North Carolina and California. We have to fight to keep innovation jobs right here in New Jersey.”

According to DePhillips, who served on the state’s Biotechnology Task Force and currently sits on the Assembly Science, Innovation and Technology Committee, the new law will give the state a chance to be a “true leader” when it comes to innovation.

“The entrepreneurs I’ve spoken to have said they need private investment,” DePhillips said. “This will help meet that need.”

Corrado weighed in about the new law before it was passed, writing:

“What we’re missing is a tax environment that encourages investors to put that talent to work in new tech businesses right here in the Garden State. This legislation helps fix that.”

Corrado added:

“The high-tech industries that we’re looking to build in New Jersey are where well-paying jobs will be created in the coming decades. If we don’t work to grow our innovation economy here in New Jersey, it will happen somewhere else, and more of our young people and families will be forced to follow.”

The increased tax breaks for angel investors come at a time of renewed focus on incentive programs for corporations and businesses in New Jersey.

Last year, a state task force revealed that the New Jersey Economic Development Authority has given out more than $11 billion in corporate tax subsidies over the past 14 years. Several of the companies that got awards have been accused of misleading the agency about their likelihood of moving jobs out of New Jersey. Others have been connected to politicians such as behind-the-scenes Democratic power player George Norcross, who is connected to multiple companies that benefit from the tax incentives.

• See related article: Task Force Probes New Jersey's $11B 'Corporate Gravy Train'
• See related article: Report Says NJEDA Program Provided Big Benefits To NJ Political Boss
• See related article: New Jersey Activists Blast Christie-Era Corporate Tax Breaks

After the state comptroller issued a scathing report about the past decade of NJEDA tax breaks, Assemblyman Jay Webber, a Republican who represents District 26, said that accountability is "nearly nonexistent" in New Jersey's corporate subsidy programs.

• See related article: Webber Says NJ Bill Will Fight 'Cronyism,' Blasts $11B Tax Breaks

However, other experts have argued that tax breaks for companies are needed to keep New Jersey's business environment competitive.

Earlier this year, the New Jersey Business & Industry Association (NJBIA) said that the state's tax incentive programs are a "key tool" in its economic development strategy.

According to Andrew Musick, NJBIA vice president for government affairs, said that the Garden State's high tax rates put it at a competitive disadvantage in the region, as well as the nation. Without a robust incentive program to offset them, New Jersey would find it difficult to attract companies that provide quality employment opportunities for its residents.

"There are many great qualities that attract businesses to New Jersey, such as our highly educated workforce and accessibility to major markets, like New York City and Philadelphia," Musick said. "However, the high cost of doing business and high cost of living serve as a barrier to entry into our state. As such, tax incentives play a key role in keeping New Jersey competitive with surrounding states. "

• See related article: Murphy 'Hypocritical' On Tax Incentives, County Officials Say

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