The state Assembly voted Thursday to place restrictions on corporations that merge with companies overseas to reduce their tax burden, as New York-based Pfizer Inc. announced it would last week.
The bill (A3624) would bar inverted domestic corporations from receiving state tax breaks or public contracts. The Assembly passed it, 45-31-3.
Corporations shouldn't be rewarded for incorporating overseas to avoid U.S. taxes with taxpayer dollars, said a bill sponsor, Assemblyman Troy Singleton (D-Burlington). New Jersey has finite resources, he said, and those should be used to support companies that invest here.
"Only those companies loyal to the U.S. and our workforce should be able to reap the benefits of taxpayer-funded contracts or subsidies," Assemblyman Joseph Lagana (D-Bergen), another sponsor, said.
Under the proposed law, the state treasurer would decide whether a corporation applying for an economic development subsidy or bidding for a state contract meets the definition of an inverted domestic corporation.
A corporation would be required to annually certify to its legal status and return any development subsidies if its status changes "during the term of a development subsidy."
Pharmaceutical maker Pfizer has announced plans to merge with the Ireland-based maker of Botox, Allergen Plc. In 2010, the state awarded Pfizer a more than $9 million Business Employment Incentive Program grant, but the company hasn't received any money yet, according to New Jersey Economic Development Agency records.
Earlier this week Gov. Chris Christie signed into law a ban on businesses that have previously defaulted on subsidized loans from receiving economic development incentives.