Net Operating Loss Carry Forward Bill Passes Senate
Friday, October 24, 2008

MEMORANDUM

TO: Members of the New Jersey Senate

FROM: Kathleen A. Davis, Executive Vice President & COO

RE: S-2130 (Codey/Buono)

DATE: October 23, 2008

The Chamber of Commerce Southern New Jersey supports S-2130 (Codey/Buono), which would increase the carryover period of net operating loss deductions under the corporation business tax for 20 years.

The Chamber believes this legislation will be an important tool for many of our member companies, including small businesses, high tech companies, manufacturers and start up companies, who are more inclined to see unexpected drops in their profitability. There are many circumstances under which normally profitable businesses may experience losses, including an economic downturn, entering a new line of business, expanding into a new geographic area, or factors that specific to their particular industry.

The income averaging allowed in this legislation will permit businesses to recognize losses over a longer period of time, thereby freeing up capital that would have been paid in taxes to be used by the company to invest in its existing workers, hire new employees, purchase equipment, research and development activities, or simply to cover normal operating expenses.

In addition, the Chamber believes conforming New Jersey to national standards and our neighboring states is good policy. Currently, New York, Pennsylvania, Connecticut, Delaware, Maryland, Washington D.C. and Virgina all use the federal 20-year standard for net operating losses.

This bill sends a signal to the business community that our policymakers recognize the position our state is in terms of competitiveness, and are serious about positioning our state to rebound more quickly when the economy starts to turn around.

For these reasons, we urge you to support S-2130 (Codey/Buono).