Bill Text: NJ S2398 | 2014-2015 | Regular Session | Introduced
Bill Title: Prohibits State administered pension fund investment in corporations shifting ownership or operations outside the U.S. for tax purposes.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2015-01-15 - Referred to Senate Budget and Appropriations Committee [S2398 Detail]
Download: New_Jersey-2014-S2398-Introduced.html
Sponsored by:
Senator SHIRLEY K. TURNER
District 15 (Hunterdon and Mercer)
SYNOPSIS
Prohibits State administered pension fund investment in corporations shifting ownership or operations outside the U.S. for tax purposes.
CURRENT VERSION OF TEXT
As introduced.
An Act prohibiting the investment of State administered pension funds in corporations shifting ownership or operations outside the United States of America for tax purposes, supplementing P.L.1950, c.270 (C.52:18A-79 et seq.).
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. Notwithstanding the provision of any law or regulation to the contrary, no asset of a pension, annuity, or other retirement fund administered by the State shall be invested in a debt or equity instrument of a corporation that lowers its annual worldwide effective income tax rate by 1/5 or more within three years predominately due to a shift in ownership or operations outside the United States of America.
b. The State Investment Council and the Director of the Division of Investment in the Department of the Treasury shall sell, redeem, divest, or withdraw any investment held in violation of subsection a. of this section within three years of the date of enactment of this section.
c. (1) No later than sixty days after the date of enactment of this section, the Director of the Division of Investment shall file with the Legislature, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), a report detailing all investments held as of the date of enactment of this section that violate subsection a. of this section.
(2) Until the date that all assets held in violation of subsection a. of this section are no longer held pursuant to subsection b. of this section, the Director of the Division of Investment shall file with the Legislature, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), an annual report detailing all investments held in violation of subsection a. of this section. The annual report shall be due on the State business day that most closely coincides with the anniversary of the date of enactment of this section.
d. As used in this section:
"Annual worldwide effective income tax rate" means the total amount of federal, state, local, and foreign income tax paid for a corporation's fiscal year divided by the total amount of worldwide net income of the corporation for the fiscal year.
"Shift in operations" means increasing the percentage of a corporation's income sourced outside the United States of America on account of increased foreign activity and decreased domestic activity.
"Shift in ownership" means the
acquisition of a foreign business entity's equity or assets by a domestic
business entity or acquisition of a domestic business entity's equity or assets
by a foreign
business entity.
2. This act shall take effect immediately.
STATEMENT
This bill prohibits State administered pension fund investment in corporations shifting ownership or operations outside the U.S. for tax purposes (i.e. corporate inversion tactics). The purpose of this bill is to prevent the State's pension fund investment from supporting the domestic income generation activities of corporations willing to flee the U.S. to avoid tax liability.
The bill prohibits the investment of State administered pension funds into a corporation shifting ownership or operations outside the U.S. if that shift lowers the corporation's effective income tax rate by 20% or more within a three-year-period. The bill requires the State to dispose of all investments held in violation of this prohibition within three years of the date of enactment. The bill also includes two reporting requirements:
(i) an initial report detailing the current investments in corporations using inversion tactics that is due within 60 days of the date of enactment; and
(ii) an annual report detailing the progress made in disposing of investments in corporations using inversion tactics.
The annual reporting requirement expires upon the complete disposal of investment in corporations using inversion tactics.
