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N.J. Governor Blocks Digital Tax Credit
by Michael Martinez
New Jersey Gov. Jon Corzine this week conditionally vetoed a measure to lure digital media companies into the Garden State with tax breaks.
Corzine, a Democrat, sent back to the state Senate a measure to provide tax incentives to digital media firms and extend credits that it already offers to film companies. The bill, S. 2526, would broaden the eligibility requirements of its existing credit program and boost the annual cap for such incentives to $30 million.
In a veto statement, Corzine said he was concerned about how much the bill would cost. He recommended that the annual cap for the tax credit program be set at $5 million. He also said it is imperative that the legislation include a provision that would require companies to create jobs.
"It would be preferable to include job creation as an express component of the tax credit program and to consider job creation in calculating the amount of tax credits to be awarded," Corzine said.
The bill was advertised as a mechanism to attract innovative companies to New Jersey and create high-income jobs. Its architects this spring cited a study by Ernst & Young that estimated the companies it would bring to the state would generate as much as $1 billion in economic output during the first five years of the law's implementation.
Corzine said he would reconsider the legislation if lawmakers adopted his recommendations. His other suggestions include inserting language to ensure that part of the new credits would go to digital media production firms, instead of grouping them together with film studios. "I believe a better approach would be to separate these related but distinct tax credit programs," he wrote.
Democratic state Sen. Paul Sarlo, one of the bill's chief sponsors, told AP that Corzine's recommendations essentially "gutted" the legislation. He said there is a strong case for the Legislature to override's Corzine's veto.
In other tax-related news, New York Gov. Eliot Spitzer this week abandoned a plan to require online companies to collect sales taxes for purchases made by state residents.
The New York Sun reported Wednesday that Spitzer was considering a proposal to impose an 8 percent tax on such sales. Under the plan, online vendors would have carried the burden of reporting those taxes.
State Budget Director Paul Francis said in a statement after publication of the Sun's story that Spitzer does not believe now is the time to be increasing sales taxes on New York residents. Francis said Spitzer has told the state Department of Tax and Finance to "pull back" the plan.
Republican state Sen. Dean Skelos told the Sun that his party considers Spitzer's abandoned proposal the "Grinch Tax" because it would have been implemented during the holiday shopping season. He accused the Democratic governor of attempting to implement policy without consulting the Legislature or the public.
N.C. Sex Offender Challenges Tracking Efforts
A registered sex offender in North Carolina has challenged in federal court his state's use of electronic devices to track documented criminals.
A 2006 state law requires serious sex offenders to be monitored with global positioning devices. Hope Mills, N.C., resident Jay Usategui, who served more than a year in prison for taking indecent liberties with a minor, has filed a lawsuit in the U.S. district court in eastern North Carolina challenging the constitutionality of the act.
In a complaint filed Nov. 2, Usategui argued that the law should not apply to him retroactively because the crimes to which he pleaded guilty occurred long before it took effect. He also claimed that the ankle bracelet corrections officials have tried to force him to wear interferes with his quality of life, and subjects him to public ridicule and scorn.
A judge did not determine whether Usategui should be classified as a serious sex offender when he was released from prison. According to Usategui, law enforcers told him in January that because of legislative changes, his classification as a sex offender would be raised so that he would be monitored.
Usategui is seeking a declaratory judgment that the satellite-based monitoring program is unconstitutional as it applies to him. He also has asked the court to permanently forbid the state from forcing him to participate in the program because of his prior conviction.
Keith Acree, a spokesman for the Correction Department, told The News & Observer of Raleigh that the case will help set the boundaries for how the tracking program should be implemented. He said it is "new territory" for North Carolina and other states with similar statutes.
Utah's Top Cop Rebuts Blog Post By Felon
Utah's top cop this week wrote an open letter to rebut a blog post suggesting that he endorsed accusations made against a publicly traded online firm based in his state.
State Attorney General Mark Shurtleff wrote to address comments made by Sam Antar, an accountant who was convicted of money-laundering in the 1980s, about a state seminar on white-collar crime in which Antar recently participated.
Antar now pens a blog, where he has been particularly critical of the retailer Overstock.com, which has accused research firms of conspiring to short-sell the company in negative reports. According to Shurtleff, Antar was invited to the seminar to provide a criminal mastermind's perspective on white-collar crime and was warned not to advertise his invitation as endorsement of his views on Overstock.
"Based on that warning, officials in my office secured a promise from [Antar] that he would not use this invitation for that purpose," Shurtleff wrote. "So much for the promise of a convicted felon!"
Shurtleff accused Antar of refusing to post Shurtleff's open letter as a comment to one of the posts on Antar's blog. He urged the public to "carefully scrutinize and objectively examine" public statements that Antar makes on the matter.
Overstock CEO Patrick Byrne lauded Shurtleff's letter in a news release. He said the "real investigative journalists left in this country should explore whose interests are being served by the promotion" of Antar's work by mainstream media outlets.
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