While New Jersey is home to one of the highest business tax rates in the nation, financial executives attribute the state's lack of competitiveness in retaining and attracting business to the complexity of its tax system, according to a survey of chief financial officers conducted by Alvarez & Marsal Taxand LLC.
"With competition for corporate headquarters and the jobs that come with them increasing in the face of a challenging economy, it will be interesting to see if states modify their taxing systems in an aggressive attempt to retain contracts and attract new business," said Don Roveto, managing director at A&M Taxand, in a statement. "When companies look to relocate corporate functions or expand operations, initial credits and incentives may be the most relevant factor from a tax perspective, although the ongoing tax burden must be considered."
According to the survey of 302 CFOs in large and small companies across the United States, New Jersey ranked in the bottom three — alongside New York and California — as the least-competitive state for business from the perspective of a complex tax system and high tax rates.
According to Carolyn Shantz, managing director of sales and use tax for A&M Taxand, the survey results "confirm that larger companies view the impact of tax as a significant or major driver of their business decisions."
Robert N. Lowe, CEO of A&M Taxand, said "confidence in knowing precisely what the tax code will require has become more important than how much it will cost" businesses in taxes.
"For companies to plan, to invest, to create jobs and to grow, they must have certainty," Lowe said in a statement. "As long as proposed changes remain up in the air, companies will be forced to continue to burn fuel operating in holding patterns, rather than charting productive courses forward."
It's just the latest survey to take issue with the state's business and tax environment: In April, the Small Business and Entrepreneurship Council's Business Tax Index put New Jersey at No. 49, and in May, a survey of 650 CEOs ranked the state 45th in business climate.