New Jersey’s high corporate tax, state sales tax, income tax and property taxes give it the least competitive business climate in the region, according to New Jersey Business & Industry Association 2020 Business Climate Analysis.
The report released Monday analyzes six individual business cost drivers in seven states including New Jersey, Massachusetts, Connecticut, New York, Pennsylvania, Maryland and Delaware.
New Jersey ranked bottom overall.
“The only way for New Jersey to turn this situation around is with comprehensive reforms that are long-term and sustainable, not more tax increases and short-term fixes that only get the state through the next one-year budget cycle or two-year election cycle,” said NJBIA President and Chief Executive Officer Michele Siekerka in a statement.
Siekerka said the NJBIA hopes that Gov. Murphy’s state budget address, set for Tuesday, will address some of the issues.
The six factors analyzed by the annual analysis – prepared by NJBIA Director of Economic Policy Research Nicole Sandelier – were minimum wage, top income tax rate, top corporate tax rate, state sales tax rate, top unemployment tax rate and property taxes as a percentage of income.
States are compared and scored from 1 (least competitive) to 7 (most competitive). New Jersey had an overall business climate score of 16, making New Jersey the weakest link for the third straight year.
Delaware ranked first with 31 points, followed by Maryland with 30 and Pennsylvania with 28. They had the top three spots, in the same order, last year.
With 23 points, New York’s overall score improved one point while Connecticut dropped one point to 22. Massachusetts ranked sixth both years with 20 points.
The only way for New Jersey to turn this situation around is with comprehensive reforms that are long-term and sustainable.
– Michele Siekerka, president and CEO, NJBIA
Of all seven states, New Jersey had the highest top income tax rate (10.75 percent), top corporate tax (10.5 percent), state sales tax (6.625 percent) and property taxes paid as a percentage of income (5.05 percent).
New Jersey’s current top corporate tax rate is the second-highest in the nation.
“Misguided proposals that expand New Jersey’s income tax, raise the state sales tax, maintain our corporate business tax as a national outlier, and ignore the issues that drive high property tax rates would only worsen our business climate,” Siekerka said in a statement. “New Jersey needs a more competitive economy, not just for the businesses operating here and their executives, but for the middle-income employees who depend on these businesses for their livelihood.”
Noting that “more taxes and more spending” won’t solve New Jersey’s challenges, Siekerka said: “What’s needed are structural budget reforms that address New Jersey’s long-term debt and the state’s unsustainable spending on platinum-level public employee health care plans and pensions.
“Pension and benefit reform will allow New Jersey to spend more on important public policy priorities such as education and transportation.”
According to the association’s analysis of audited state revenues, expenses and debt found in New Jersey Comprehensive Annual Financial Reports, state revenues increased just 23 percent from 2007 to 2017 while expenses have increased 45 percent and debt has increased 382 percent.