NJ Taxes Bad for Business — and Not Just Because They’re Expensive, Report Says
We’re No. 1!
A new report by the Tax Foundation finds New Jersey has the most onerous, least competitive tax code in the entire country.
The annual report, which measures how well each state’s tax code is structured, reviewed more than 100 tax variables in five different tax categories: corporate, individual income, property, sales and unemployment insurance.
“When it comes to tax competitiveness for the 50 states, New Jersey ranks 50th, dead last, and it has for several years,” said Jared Walczak, a senior policy analyst at the Tax Foundation.
He noted the 2018 State Business Tax Climate Index shows that “right now, New Jersey is not only a high-tax state but, unfortunately, even more importantly for our index, a very complex state on taxes.”
Walczak said Jersey’s complex tax system is a problem because businesses look for “certainty and predictability, they want a tax code that they can plan for and one that predicts their profitability.”
He stressed the report does not look at how much is raised through taxes, but how the taxes are assessed and collected.
He pointed out New Jersey has high tax rates for things like the sales tax, a high corporate income tax rate at 9 percent, and a relatively high income tax rate for small businesses.
“You also have significant complexity, multiple ways of calculating different taxes, costly and difficult UI taxes. It’s just unfortunately a complex tax system across the board.”
He noted New Jersey’s sales tax regime is relatively narrow but also has an unusual policy for a couple of border counties and locations.
He said the ideal tax code raises revenue “without picking winners or losers and without guiding economic decision making. And states like New Jersey fail to do that.”
He pointed out in Massachusetts taxes are still high, but the tax system has been streamlined and simplified. “And that is helping to attract more businesses to relocate there.”
The report finds other states besides New Jersey with complex, confusing tax codes include New York, California, Vermont and Minnesota.
The states identified by the report with the best, most simple tax codes are Wyoming, South Dakota, Alaska, Florida and Nevada.