The Tax Foundation, an independent tax policy research organization, lists New Jersey dead last in its annual rankings of business tax climate by state, underscoring the need for state policymakers to focus on strategies to make New Jersey more affordable, the New Jersey Business & Industry Association said today.
The Garden State has an overall rank of 50th in the 2018 State Business Tax Climate Index, which observes the impacts of property taxes, corporate taxes and income taxes in each state. The report also weighs the complexity of each state’s tax system and how it impacts business growth.
“Unfortunately, New Jersey continues to find itself landing at the bottom of this study and others like it around the nation,” said Michele Siekerka, NJBIA president and CEO. “We know that our residents can no longer afford their property taxes. We need to acknowledge the cost drivers, such as how we fund education, the costs of multiple levels of government and our current pension crisis. Only by acknowledging these cost drivers can we seek alternatives and solutions.
“When it comes to the cost of doing business, we simply cannot allow any new taxes without equitable tax fairness. We have incredible assets here in New Jersey, but clearly we are at a tipping point in terms of what our residents and businesses can afford, and of having any chance of regional competitiveness.”
The ranking comes despite tax reform enacted last year on the estate tax and retirement income. While that was a significant step in the right direction, it was not enough to impact the rankings. The survey finds New Jersey with the highest property taxes in the country. New Jersey is ranked 48th highest in individual taxes, 46th in sales taxes and 42nd in corporate taxes. In unemployment insurance taxes, New Jersey is ranked 36th, a positive finding surely resulting from the bipartisan comprehensive reforms made to the Unemployment Insurance fund.
Siekerka noted that while nearby New York (the No. 2 outmigration state for New Jersey residents following 26th ranked Pennsylvania, which is the No. 1 outmigration state) is ranked 49th overall in the country, it ranks 7th in corporate taxes.
“That’s a number that really hurts us in our regional competitiveness,” Siekerka said. “New Jersey businesses can look at that number alone and see greener pastures.”
“We realize that New Jersey has tremendously rich assets that counter our taxes,” Siekerka added. “We have the highest quality K-12 education in the country, one of the most educated and talented workforces in the country and great infrastructure systems. But that said, very few can afford to pay a super-premium to live here and that’s where we’re at right now, until we take action to make New Jersey more affordable.
On Monday, Opportunity New Jersey (ONJ) released a white paper from a recent Affordability Summit to set an affordability agenda in the state. ONJ, which is co-chaired by Siekerka and Tom Bracken, president and CEO of the New Jersey Chamber of Commerce, are calling for a comprehensive state strategic plan for a more affordable New Jersey.
For more information on the white paper and the Affordability Summit, visit here.