Sen. Michael Testa Warns New Jersey Is Losing Manufacturing Jobs to Other States

South Jersey lawmaker says high corporate taxes are discouraging investment, even as a bipartisan $500 million incentive program begins attracting new manufacturers.

VINELAND, N.J. — State Sen. Michael Testa is warning that New Jersey is losing manufacturing jobs and major corporate investments to neighboring states, arguing that the state's business tax structure is making it increasingly difficult to compete for employers.

During an appearance Wednesday, Oct. 7, on The AC Mike Lopez Show on News Talk 1400 and 92.3 WOND, Testa said New Jersey needs to take a more aggressive approach to retaining businesses and attracting new manufacturing operations.

"Right now, the state of New Jersey is losing a lot of business to our neighboring states, namely Pennsylvania," Testa said.

The Republican senator, who represents Cape May County and portions of Atlantic and Cumberland counties, said he participated in a discussion earlier Wednesday with the New Jersey Business & Industry Association and the New Jersey Manufacturing Extension Program.

Testa serves as co-chair of the bipartisan New Jersey Legislative Manufacturing Caucus.

He said the discussion focused on the challenges facing manufacturers and the growing competition among states for major corporate investments.

"One of the startling statistics that we should be pointing to, as Republicans and as just citizens in the state of New Jersey, are how many large-scale employers, manufacturers, are leaving the state of New Jersey or, if their headquarters are here, are investing billions of dollars out of state," Testa said.

He cited investments by Johnson & Johnson in North Carolina and Pennsylvania as examples of companies expanding operations outside New Jersey.

"We're losing so many jobs to other states," he said.

Testa argued that the state cannot afford to ignore the problem.

"When you find yourself at the bottom of a hole with a shovel, stop digging," he said.

"We have to admit that we have a problem and we have to stop the bleeding. And at this point, we really can't afford to use a Band-Aid. We need a tourniquet."

Corporate Taxes at Center of Debate

Testa identified New Jersey's corporate tax structure as a major obstacle to attracting manufacturers.

He compared the state's corporate tax burden with Pennsylvania's ongoing effort to reduce its corporate net income tax rate.

"Governor Shapiro is lowering the corporate business tax to 4.99% in Pennsylvania, while New Jersey has an 11.5 nationwide-high corporate business tax," Testa said.

Pennsylvania is gradually reducing its corporate net income tax rate from 9.99% in 2022 to 4.99% in 2031.

The rate for 2026 is 7.49%.

New Jersey's standard corporate business tax rate is 9% for corporations with taxable income exceeding $100,000. However, certain large corporations with taxable net income exceeding $10 million are subject to an additional 2.5% Corporate Transit Fee, bringing their combined rate to 11.5%.

That additional fee is scheduled to remain in effect through 2028.

The differences are important because not every New Jersey corporation pays the combined 11.5% rate.

Still, Testa argued that the state's overall tax structure places it at a competitive disadvantage.

"What does that mean? It means that we don't have a good climate for business here in the state of New Jersey," he said.

He pointed to Pennsylvania Gov. Josh Shapiro, a Democrat, as an example of a political leader pursuing corporate tax reductions.

"This isn't a Republican or a Democrat thing, because Governor Shapiro is a Democrat," Testa said.

"But he understands that Pennsylvania needs to be open for business and it needs to be a good climate for large employers."

Supporters of New Jersey's corporate tax policies argue that the revenue supports essential public services, including transportation infrastructure, while business location decisions also depend on factors such as workforce availability, transportation access and proximity to customers.

Testa acknowledged the revenue argument but said lawmakers should also consider the economic consequences when companies move elsewhere.

"You know what else is a really good source of revenue? Keeping jobs in the state of New Jersey," he said.

A $500 Million Effort to Attract Manufacturers

Despite his criticism of the state's business climate, Testa pointed to legislation he helped develop as evidence that Republicans and Democrats can work together to encourage manufacturing investment.

The Next New Jersey Manufacturing Program, signed into law in August 2025, established a $500 million tax credit initiative designed to attract manufacturers and encourage existing companies to expand.

Testa sponsored the legislation alongside Democratic Sen. Linda Greenstein.

The Assembly version received bipartisan support from Assembly members Louis Greenwald and Antwan McClellan.

"I was the author of the Next New Jersey Manufacturing Program, the largest investment in manufacturing in the history of the state of New Jersey," Testa said.

"And I co-authored that in a bipartisan manner with Senator Linda Greenstein."

The program is administered by the New Jersey Economic Development Authority.

Qualifying manufacturers can receive tax credits based on their proposed capital investment and the number of jobs they create.

Individual awards can reach $150 million.

To qualify, companies generally must invest at least $10 million, create at least 20 full-time jobs and meet additional requirements involving wages, workforce development and environmental standards.

Eligible industries include advanced manufacturing, food and beverage production, defense, clean energy and life sciences.

Testa said the program represents an important step but cannot solve New Jersey's broader competitiveness challenges by itself.

"A $500 million tax credit, that sounds like a lot of money, but it's not when you have over a $60 billion budget," he said.

"We're doing our very best to not only allow manufacturers in the state of New Jersey to survive, we need them to thrive."

Program Already Producing Investments

The manufacturing initiative has already resulted in a significant investment announcement.

In June, the New Jersey Economic Development Authority approved the program's first tax credit award.

Starman New Photonics, an advanced technology manufacturer, received approval for a $37.5 million tax credit associated with a planned $150 million investment in Warren, Somerset County.

The company plans to renovate a 100,000-square-foot facility to manufacture high-speed optical transceivers used in artificial intelligence infrastructure.

The project is expected to create 250 jobs.

The announcement provided an early example of the type of investment the manufacturing program was designed to encourage.

At the time, Testa praised the company's decision to establish manufacturing operations in New Jersey, describing the project as beneficial to workers and the state's economy.

The investment also demonstrates that New Jersey continues to attract some major manufacturing projects despite the concerns Testa raised Wednesday.

Testa Wants More Investment in South Jersey

For Testa, attracting manufacturing investment is particularly important to South Jersey, where communities have long sought to diversify their economies and create additional employment opportunities.

Atlantic County remains heavily dependent on tourism, hospitality and casino-related employment, while Cumberland County has an established manufacturing and agricultural economy.

Testa said he wants South Jersey to compete for companies expanding domestic production or relocating manufacturing operations from overseas.

"We want to see some of those large manufacturers who left the United States come back to the United States," he said.

"And as a state senator for Legislative District 1, not only do I want those manufacturers to come to New Jersey, I want them to be in South Jersey."

He said manufacturing jobs can have an economic impact extending beyond the companies themselves.

When major employers relocate, workers sometimes follow, potentially reducing a state's tax base and affecting surrounding businesses.

"We're not only losing the employers, we're losing the employees who have the skills necessary to earn really good livings right here in the state of New Jersey," Testa said.

"And we can't — we simply can't afford to allow that to happen over and over again."

A Debate Over New Jersey's Economic Direction

Testa's comments come as Gov. Mikie Sherrill's administration faces continuing questions about affordability, economic development and the state's ability to compete with neighboring states.

The senator criticized Democratic leadership in Trenton, arguing that the state needs to acknowledge the challenges facing businesses.

"We have to get other legislators and the Sherrill administration to admit that we have a problem," he said.

Those comments reflect Testa's political assessment. New Jersey's economic development strategy also includes tax incentives, workforce programs and other efforts intended to attract investment and support existing employers.

The Next New Jersey Manufacturing Program itself demonstrates that lawmakers from both parties have found common ground on at least some economic development initiatives.

The broader debate involves whether additional tax reductions would generate enough new investment and employment to offset potential losses in state revenue.

For Testa, the priority is keeping employers and skilled workers from leaving.

"Keeping jobs in the state of New Jersey," he said, is essential to the state's economic future.

State Sen. Michael Testa appeared Wednesday, Oct. 7, on The AC Mike Lopez Show, heard weekdays from noon to 1 p.m. on News Talk 1400 and 92.3 WOND.