Researchers: NJ’s Business Tax Climate Worst in the Nation
An independent tax policy research organization finds New Jersey is not doing a good job of attracting or keeping businesses to the Garden State, because state taxes are so high.
"The latest tax data has been tabulated and it shows that New Jersey ranks 50th in the country, so the worst business tax climate in the country," said Scott Drenkard, an economist, and manager of state projects at the Tax Foundation.
He stressed what's driving this low ranking "is a really uncompetitive individual income tax score, and very, very high property taxes, the corporate tax component as well is something that can be improved."
Drenkard said while New Jersey continues to keep its unfriendly tax code "there's other states that are doing a lot of really good work on tax reform. New York, even for example, just accomplished pretty substantive corporate tax reform in the last year."
In other words, the Garden State has plenty of room for improvement.
"The corporate tax rate is one of the easiest places to start because the corporate income tax is one of the most narrow based taxes in the code, and even with such a high rate, that tax doesn't really bring in that much revenue," he said.
In fiscal year 2011, Drenkard said, the corporate tax in New Jersey only brought in 4.2 percent of state and local revenue.
"Rate cuts don't really cost you that much in terms of your state coffers, but they can have a profound effect on business location decisions and a pretty good effect on economic growth as well," Drenkard said.
He also said that eventually, property taxes and individual income taxes must be addressed to change how people view living in New Jersey, and local governments will need to work toward tax reform as well.
"There's lots of great things about New Jersey," Drenkard said. "The tax code isn't one of them though. Any growth that the state has had in the past couple of years has happened in spite of a tax code that makes it hard to open a business, to keep a business open."