New Jersey’s Business Tax Climate Improves To 49th [AUDIO]
There's good news for New Jersey businesses. The state is no longer ranked as the least business friendly. Don't celebrate just yet because our business climate is still in critical condition.
The non-partisan Tax Foundation ranked New Jersey 48th on income taxes, 49th on property taxes and second to last overall.
"New Jersey still has some of the highest property taxes in the country. In fact, per capita, state residents pay $2,671 per capita, that's about 5.3 percent of personal income. Some of the other reasons include a high income tax rate and a high corporate tax rate," said Scott Drenkard, an economist at the Tax Foundation.
The good news is that New Jersey edged out New York, who earned the last spot overall.
"We used to be behind New York, now we're in front of them...so being in front of your biggest competitor for jobs and investment I think is a good thing," said Phil Kirschner, president of the New Jersey Business & Industry Association.
But Drenkard says New Jersey's rise to the 49th spot had less to do with new policies enacted and more with reforms that New York put in place.
"Governor Christie actually vowed last year that New Jersey's score would improve and that did ring true, but not because of any action from New Jersey. What we saw instead was New York's top personal income tax rate decrease, bumping them into last on the list" said Drenkard.
But he says there was one bright spot for New Jersey.
"The state was able to stop a proposed millionaires' tax from being enacted and if that had been enacted that would have kept New Jersey at 50th."
The National Federation of Independent Business says the report is an embarrassing distinction that leaders in Trenton must change.
New Jersey ranks in the bottom ten in every tax category except the unemployment payroll taxes," said NFIB State Director Laurie Ehlbeck. "Governor Christie and legislative leaders have made progress on controlling growth in state spending, but they've made virtually no progress in making New Jersey more affordable for taxpayers and small businesses."
But Assembly Budget Officer Declan O'Scanlon (R-Monmouth) says the report indicates a positive first step.
"The message from the Tax Foundation was delivered with clear guidance: reducing the state's highest in the nation tax burden will help New Jersey's standing in the eyes of the business leaders making the decisions whether to locate to New Jersey, remain in the state, expand here and hire here. The policies being advocated by those on the other side of the isle, namely increasing the tax on small business, will send the opposite message to those people who are so vitally important in New Jersey's economy," stated O'Scanlon.
Kirschner says while the two-percent property tax cap seems to be working, there is more that the legislature can do to help small businesses.
"I think enacting the income tax credit that Governor Christie wants and that Senate President Sweeney is behind, I think if we do that, we are going to do even better next year."
The top ten states in the 2013 Index are Wyoming (#1), South Dakota (#2), Nevada (#3), Alaska (#4), Florida (#5), Washington (#6), New Hampshire (#7), Montana (#8), Texas (#9), and Utah (#10).
The 10 lowest ranked states in the 2013 Index are Maryland (#41), Iowa (#42), Wisconsin (#43), North Carolina (#44), Minnesota (#45), Rhode Island (#46), Vermont (#47), California (#48), New Jersey (#49), and New York (#50).