NJ Among the Highest for Corporate Income Taxes
The conservative Tax Foundation finds that New Jersey's business-unfriendly corporate income tax rate is among the nation's highest.
Foundation Policy Analyst Janelle Cammenga says New Jersey also has a temporary surcharge of 1.5% on businesses with income over a million dollars.
The top rate is 10.5%, the second-highest in the nation. Only Iowa has a higher corporate income tax rate. New Jersey is one of six states with a top corporate income tax of 9% or higher. Pennsylvania is included in that group.
"Companies are going to be looking at these rates. They're going to be looking at how New Jersey taxes are structured," Cammenga said.
Cammenga said a problem is that the state's four tax brackets are actual rates.
"So if a company's income passes one of those thresholds, then all of the income is taxed at that higher rate, not just income that they make above that bracket," she said.
A 2018 study by the Federal Reserve found that for every one percentage point increase in the corporate tax rate, employment in start-up firms declines 3.7%.
"It's going to affect where they locate and where they hire people. And that affects your jobs, the rest of your economy," Cammenga said.
To that point, Assemblyman John DiMaio, R-Warren, commenting on the federal Labor Department's announcement last Friday that the national economy created 225,000 jobs in January, says New Jersey should follow the same policies that have created a late-stage economic boom.
"Being business-friendly is the difference maker," he said.