Paul L. Caron

Thursday, May 2, 2019

NY Times: Lawyer With Close Ties To Democratic Politicians Edited Tax Break Legislation That Saved Client $260m In Taxes But Produced Minimal Benefits To New Jersey

New York Times, The Tax Break Was $260 Million. Benefit to the State Was Tiny: $155,520.:

How a lawyer with deep connections to Democratic politicians in New Jersey helped to dole out hundreds of millions of dollars in state tax credits.

Kevin D. Sheehan, a lawyer whose firm had close ties to Democratic leaders, was allowed to edit drafts of the bill and he made changes that benefited specific companies, a review by The Times found.

NY Times

It was called the Economic Opportunity Act, a measure intended to kick-start the sputtering post-recession economy in New Jersey, particularly in its struggling cities. The state would award lucrative tax breaks to businesses if they moved to New Jersey or remained in the state, creating and retaining jobs.

But before the bill was approved by the Legislature, a series of changes were made to its language in June 2013 that were intended to grant specific companies hundreds of millions of dollars in additional tax breaks, with no public disclosure, according to interviews and documents obtained by The New York Times.

Many of the last-minute changes to drafts of the bill were made by a real estate lawyer, Kevin D. Sheehan, whose influential law firm has close ties to Democratic politicians and legislative leaders in New Jersey.

Mr. Sheehan was allowed by lawmakers to edit drafts of the bill in ways that opened up sizable tax breaks to his firm’s clients, according to a marked up copy of the legislation obtained by The Times, which identifies Mr. Sheehan’s changes.

Nearly six years later, the fallout from the legislation has set off an uproar in the State Capitol over allegations that the state’s $11 billion in economic development programs have been poorly managed corporate giveaways that have brought few benefits to New Jersey.

One of the clauses added by Mr. Sheehan to the text of the bill helped a client, Holtec International, an energy technology company, to claim a tax credit of $260 million in 2014 to build a new headquarters at a port in Camden, N.J.

The state’s own analysis at the time indicated that for the $260 million tax credit to Holtec, the net benefit to taxpayers would be tiny: $155,520 in potential benefits for the state over 35 years, including new tax revenue, as well as the creation of 235 new jobs and the retention of 160 jobs.

That is about $650,000 in tax credits for each job.

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"It's Chinatown, Jake....." 1970's
"Its Jersey....", timeless

Posted by: Joe | May 3, 2019 4:47:42 AM

This all depends on whether Holtec was going to build there in the first place, without the tax incentives. If that was the plan all along, then the state missed out on some revenue, the poor dears. If, however, the tax waivers convinced Holtec to build there, the state made out well. See AOC, Amazon.

Posted by: John Faszholz | May 3, 2019 10:15:02 AM