Bill Text: NJ S2141 | 2014-2015 | Regular Session | Introduced
Bill Title: Provides corporation business tax and gross income tax credits for certain employers engaged in farming operations.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2014-06-09 - Introduced in the Senate, Referred to Senate Economic Growth Committee [S2141 Detail]
Download: New_Jersey-2014-S2141-Introduced.html
Sponsored by:
Senator DIANE B. ALLEN
District 7 (Burlington)
SYNOPSIS
Provides corporation business tax and gross income tax credits for certain employers engaged in farming operations.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning tax credits for certain employers engaged in farming operations and supplementing P.L.1945, c.162 (C.54:10A-1 et seq.) and chapter 4 of Title 54A of the New Jersey Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. As used in this section:
"Eligible employee" means an employee who is employed by an eligible employer in the State and is paid the State minimum wage during some part of the taxable year by the eligible employer.
"Eligible employer" means a person that is engaged in farming operations in the State.
"Farming operations" means the commercial growing, harvesting, producing, or raising of agricultural products including crops, dairy animals, livestock, fur-bearing animals, poultry, bees, aquacultural products, horticultural products, and trees and forest products.
"Federal minimum wage" means the minimum wage rate established pursuant to 29 U.S.C. s.206 or its successors.
"State minimum wage" means the minimum wage rate established pursuant to Article I, paragraph 23 of the New Jersey State Constitution.
b. A taxpayer that is an eligible employer shall be allowed a credit against the tax imposed pursuant to section 5 of P.L.1945, c.1962 (C.54:10A-5), in an amount equal to the product of the total number of hours worked by eligible employees during the taxable year for which they are paid the State minimum wage and the amount, if any, by which the State minimum wage exceeds the federal minimum wage.
c. The order of priority of the application of the credit allowed in accordance with subsection b. of this section and any other credits allowed by law against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) shall be as prescribed by the Director of the Division of Taxation.
d. If the amount of the credit allowed pursuant to this section exceeds the amount of tax otherwise due, that amount of excess shall be an overpayment for the purposes of N.J.S.54:49-14.
e. An eligible employer who discharges an ineligible employee and replaces that employee with an eligible employee solely for the purpose of qualifying for this credit does not qualify to claim the credit for any eligible employee.
2. a. As used in this section:
"Eligible employee" means an employee who is employed by an eligible employer in the State and is paid the State minimum wage during some part of the taxable year by the eligible employer.
"Eligible employer" means a person that is engaged in farming operations in the State.
"Farming operations" means the commercial growing, harvesting, producing, or raising of agricultural products including crops, dairy animals, livestock, fur-bearing animals, poultry, bees, aquacultural products, horticultural products, and trees and forest products.
"Federal minimum wage" means the minimum wage rate established pursuant to 29 U.S.C. s.206 or its successors.
"State minimum wage" means the minimum wage rate established pursuant to Article I, paragraph 23 of the New Jersey State Constitution.
b. A taxpayer that is an eligible employer shall be allowed a credit against the tax otherwise due for the taxable year under the "New Jersey Gross Income Tax," N.J.S.54A:1-1 et seq., in an amount equal to the product of the total number of hours worked by eligible employees during the taxable year for which they are paid the State minimum wage and the amount, if any, by which the State minimum wage exceeds the federal minimum wage.
c. A business entity that is classified as a partnership for federal income tax purposes shall not be allowed the credit directly under N.J.S.54A:1-1 et seq., but the amount of credit of the taxpayer in respect of a distributive share of partnership income shall be determined by allocating to the taxpayer that proportion of the credit acquired by the partnership that is equal to the taxpayer's share, whether or not distributed, of the total distributive income or gain of the partnership for its taxable year ending within or with the taxpayer's taxable year.
A taxpayer that is a New Jersey S corporation shall not be allowed the credit directly under N.J.S.54A:1-1 et seq., but the amount of credit of a taxpayer in respect of a pro rata share of S corporation income shall be determined by allocating to the taxpayer that proportion of the credit acquired by the New Jersey S corporation that is equal to the taxpayer's share, whether or not distributed, of the total pro rata share of S corporation income of the New Jersey S corporation for its privilege period ending within or with the taxpayer's taxable year.
d. The order of priority of the application of the credit allowed in accordance with subsection b. of this section and any other credits allowed by law against the tax otherwise due for the taxable year under N.J.S.54A:1-1 et seq. shall be as prescribed by the Director of the Division of Taxation.
e. If the amount of the credit allowed pursuant to this section exceeds the amount of tax otherwise due, that amount of excess shall be an overpayment for the purposes of N.J.S.54A:9-7; provided however, that subsection (f) of N.J.S.54A:9-7 shall not apply.
f. An eligible employer who discharges an ineligible employee and replaces that employee with an eligible employee solely for the purpose of qualifying for this credit does not qualify to claim the credit for any eligible employee.
3. This act shall take effect immediately and apply to privilege periods and taxable years beginning on or after January 1, 2014.
STATEMENT
This bill provides farmers with credits against the corporation business tax and the gross income tax for the increased cost of labor caused by the increase in the minimum wage.
On November 5, 2013, New Jersey voters approved a constitutional amendment to raise the State minimum wage from $7.25 to $8.25 per hour, and tie future increases in the wage to the cost of living. This change drastically increased the cost of labor for many farmers in New Jersey, and put them at a competitive disadvantage with out-of-state farmers who pay their employees the federal minimum wage of $7.25 per hour. Consequently, many farmers are faced with the difficult decisions of cutting their workforce or their production. This tax credit will put New Jersey farmers on a level playing field with out-of-state farmers, while allowing them to pay their workers the State minimum wage.
Under the bill, eligible employers are allowed a tax credit equal to the total number of hours worked by eligible employees during the taxable year for which they are paid the State minimum wage multiplied by the amount, if any, by which the State minimum wage exceeds the federal minimum wage. Thus, if an eligible employee works 2,080 hours in a year, and the current State and federal minimum wages are $8.25 and $7.25, respectively, an eligible employer will be allowed a $2,080 credit for that employee. However, if the federal minimum wage is increased above the State minimum wage, this tax credit will be inoperative.
An eligible employer is defined as any person engaged in farming operations in the State. An eligible employee is an employee who is employed by an eligible employer in the State and is paid the State minimum wage during some part of the taxable year by the eligible employer. If an employee is paid the State minimum wage for part of the year and paid a higher wage for the remainder of the year, the employer will receive the credit for the number of hours worked by the eligible employee for which he was paid the State minimum wage.
Finally, to protect against abuse of the tax system, the bill provides that an eligible employer who fires an ineligible employee and replaces that employee with an eligible one solely for the purpose of qualifying for this credit does not qualify to claim the credit for any eligible employee.
