Subaru of America is reconsidering plans to build a training center at its new headquarters under construction in Camden, N.J., because an income tax agreement between New Jersey and Pennsylvania is being scrapped.
Tom Doll, president of Subaru of America, has threatened to halt plans for the 83,000-square-foot national training center that would be part of the headquarters site. Subaru expects to occupy the 250,000-square-foot headquarters in 2018.
Subaru and other employers in the greater Philadelphia area believe recruiting and employee retention efforts will be harmed when a reciprocal tax agreement between Pennsylvania and New Jersey expires on Jan. 1. The 1977 agreement allows New Jersey and Pennsylvania residents to pay state taxes in the state where they live, not where they work.
New Jersey state taxes are higher than those of Pennsylvania. Pennsylvania has a flat 2.07 percent income tax while New Jersey’s is graduated, starting at 1.40 percent and growing to 8.97 percent for incomes over $500,000. New Jersey Gov. Chris Christie cancelled the agreement to close a shortfall in the state’s budget.
Subaru would not say when it will decide the training center’s fate but called for Christie to reverse the decision.
“We are concerned for the long term future of the city of Camden if this legislation comes into play as it will significantly affect the available labor and talent pool by creating an extra tax burden for those people living in Pennsylvania and working in New Jersey,” Doll said in an email response to Automotive News questions.
Doll is a resident of Pennsylvania, as are about 170 other Subaru of America employees.
Subaru received a $118 million aid package from New Jersey in exchange for promising to create 100 new jobs and match the state grant with future investments at its new home.
About 600 employees housed in a cramped headquarters in Cherry Hill, N.J., and several other sites are scheduled to relocate to the new Camden headquarters.