NEWARK, NJ — Grim financial news is almost everywhere you look in New Jersey these days, thanks to the coronavirus. Hundreds of thousands of people are out of work. Evictions are soaring. Waves of small businesses are shutting their doors. And COVID-19 recovery efforts are threatening to saddle the state with billions of dollars in debt.
But while many people have been struggling to put food on the table and keep the lights on, some of New Jersey’s largest companies and richest residents have been making big bucks, a report claims.
On Thursday, Americans for Tax Fairness, For the Many Coalition and the Center for Popular Democracy released a study that examined profits among residents and companies doing business in New Jersey.
“We aren’t all in the same boat,” researchers wrote. “New Jersey’s richest billionaires are amassing enormous wealth and corporate profits are soaring.”
Three of the New Jersey residents on the list, John Overdeck, Rocco Commisso and Peter Kellogg, recently made the Forbes 400 ranking of the “richest people in America.”
Companies included in the report included Amazon and Walmart, which both have locations throughout the state. The report also named Freedom Mortgage, which is based in Mount Laurel, NRG Energy, which has a headquarters in Princeton, PSE&G, which has a headquarters in Newark, and American Water Works and the Campbell Soup Company, which are both headquartered in Camden.
Read the full report and see its methodology here.
Patch reached out to each New Jersey company named in the report. We’ll include any replies we receive in this article.
SHOPPING AT AMAZON, WALMART
Overall, Amazon’s sales were up 40 percent in the second fiscal quarter of 2020, the report stated.
Profits at the company have also doubled year-over-year, reaching $5.2 billion in its latest quarter. Amazon plans to add 14 New Jersey delivery stations this year which will nearly double the corporation’s footprint in the state, the report stated.
At least some of the profits will help to create new jobs, an Amazon spokesperson told Patch.
Amazon Logistics has signed various leases in an effort to open 14 delivery stations in New Jersey in 2020. Collectively, the stations will create thousands of full time and part time jobs, paying a minimum of $15 per hour and offering a variety of benefits packages from day one, the company stated in a news release.
Leases have been signed in Avenel, Budd Lake, Carlstadt, Jersey City, Edison, Kearny, Linden, Logan Township, Mahwah, Newark, Teterboro and West Deptford.
An Amazon spokesperson told Patch the company has spent more than $4 billion in the second quarter on COVID-19 related initiatives to help keep employees safe, provide additional compensation to its employees and delivery partners and deliver products to customers.
In addition, Amazon provided a one-time “Thank You bonus” totaling more than $500 million to all frontline employees and partners who were with the company throughout the month of June.
At Walmart, total revenues hit $134.6 billion during Q1 2020, an increase of $10.7 billion compared to the same period in 2019. Walmart U.S. sales increased by 10 percent during the pandemic, the report stated.
With 70 stores across New Jersey, Walmart has a significant footprint in the state. In previous years, the company’s average state income tax rate has been 3.4 percent despite earning millions in state profits, the report said.
A Walmart spokesperson said the company has given out roughly $1.1 billion in bonuses so far this year, in addition to the regular incentive the company provides to frontline associates on a quarterly basis.
Coincidentally, the latest round of bonuses at Walmart was paid out Thursday – the day the report was released. Those bonuses included $300 for full-time hourly associates, and $150 for part-time hourly and temporary associates.
PROFITS IN NEW JERSEY
Here are some other recent profits seen while the pandemic raged on, the report says.
FREEDOM MORTGAGE – “According to Freedom Mortgage, during the pandemic it has generated ‘$8 billion in originations in May and over $11 billion in June, a new monthly volume record.’”
NRG ENERGY – “During the pandemic, NRG’s income from continuing operations increased to $434 million in June 2020 compared to $283 million in June 2019, a 53 percent increase. Adjusted earnings also increased to $922 million in June 2020 compared to $801 million in June 2019.”
PSE&G – “Public Service Enterprise Group’s (PSEG) net income increased to $451 million in the second quarter of 2020 from $153 million in the second quarter of 2019, a whopping 195 percent increase.”
AMERICAN WATER WORKS – “American Water Works (AWW) reported second quarter 2020 revenues of $931 million, compared to $882 million in the same period of 2019.”
CAMPBELL SOUP – “Campbell Soup has seen a surge in sales during the pandemic as Americans stock up on canned goods. Net sales have increased 15 percent and earnings before interest in the first quarter of 2020 was $273 million compared to $245 million during the same period in 2019.”
Like Amazon and Walmart, some of the profits went to community programs.
In NRG's second quarter results statement, the company noted that it committed $2 million to COVID-19 relief efforts in April, including money for urgently needed safety equipment supporting first responders, as well as funds that aid local communities and teachers.
The company also allocated funding to the NRG Employee Relief Fund, which assists employees adversely impacted by natural disasters and other extraordinary [circumstances].
NEW JERSEY’S RICHEST GET RICHER
It isn’t just corporations that are making big profits during the pandemic. The combined net worth of New Jersey’s billionaires jumped by $1.77 billion from mid-March to early August, the report says.
Citing data from Forbes, the study says that New Jersey’s wealthiest resident, John Overdeck of Millburn, the co-founder of Two Sigma Investments, saw a net worth growth of $345 million between March 18 and Aug. 5.
Rocco Commisso of Saddle River, the founder and CEO of Mediacom, saw a net worth growth of $926 million. Peter Kellogg, an investor from Short Hills who sold his brokerage firm to Goldman Sachs, saw a net worth growth of $300 million.
It’s time for New Jersey’s billionaires to ante up as the state tries to make its comeback from the COVID-19 crisis, researchers said.
“New Jersey’s communities are reimagining a world with affordable housing, quality public education, well-paying jobs and community investments that will enable people not only to survive but to thrive,” the study says.
“In order to realize this vision, billionaires and corporations must pay more in taxes and finally put in their fair share,” researchers concluded.
See related article: NJ's Richest Not Paying Fair Share For COVID Recovery, Groups Say
See related article: 'Tax Rich, No Budget Cuts' Amid Pandemic, 96 NJ Economists Say
Not everybody in New Jersey agrees that taxing the rich would be a good move, however. Some experts have argued that raising income taxes during a pandemic is a recipe for disaster.
“In the middle of the economic devastation caused by this pandemic, while billions of dollars have just been authorized, it is not the time to increase anyone’s tax burden,” Michele Siekerka of the New Jersey Business & Industry Association said Wednesday.
But the money has to come from somewhere, researchers say.
“The state is facing unprecedented economic and public health crises as a result of COVID–19,” the study said. “By some estimates, it will take at least $2.8 billion in 2020 and $7.3 billion in 2021 to fill the state's general fund revenue gap.”
Here are some suggestions to pick up the slack, the study said.
Tax The Rich – “By increasing the tax rate on annual earnings above $250,000, New Jersey could generate over $1.5 billion in new revenue … This would be paid almost exclusively by New Jersey’s ultra-wealthy, with the top 1 percent – households with average annual incomes of $2.4 million – paying 70 percent of the increase.”
Bring Back Estate Tax – “Strengthening New Jersey’s inheritance tax would help guard against the deepening trend of concentrated wealth in fewer and fewer hands. Conversely, restoring the estate tax that was repealed under the Christie administration would raise approximately $500 million in new revenue.”
Keep Corporate Tax Surcharge – “In response to the overly generous federal tax cuts for corporations, New Jersey enacted a temporary surcharge on large businesses with profits above $1 million. The surcharge decreases to 1.5 percent this year, but given the extraordinary dual circumstances of economic hardship for many, and record-breaking profits for a few, New Jersey could reverse the surcharge to the previous level of 2.5 percent. This would generate $300 million in additional revenue.”
Fix ‘Gimicky’ Sales Tax – “New Jersey needs to reverse the gimmicky 2016 reduction in the sales tax rate, which has put very little extra cash in the pockets of most New Jersey working families while starving the state budget of significant resources, totaling over $600 million a year and growing … Even the wealthiest 1 percent of families only save an average of $14 a week. Those in the bottom 20 percent save less than a dollar a week.”
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