New Jersey is the third least-free state in the country, coming in ahead of only New York and California, according to a study by George Mason University's Mercatus Center.
The study calculates the ranking based on dozens of policies affecting taxes, regulations, tort liability and property rights.
"This isn't surprising to small-business owners in New Jersey," said Laurie Ehlbeck, state director of the National Federation of Independent Business. "The politicians and bureaucrats at every level have their fingers in virtually every commercial and personal activity in New Jersey."
The study also factors in personal choices such as alcohol, tobacco, gun rights, marriage rights, gambling and education. Ehlbeck said there are thousands of policies smothering freedom in New Jersey that are promoted under the banner of fairness, justice, equity, security or investment. She said residents are leaving the state and moving to places where government is less intrusive. For small businesses, she said, it's tough to survive in a state where the government injects itself into every private commercial activity and transaction.
"When you look at your tax bill and when you consider all the rules and restrictions imposed on business, property and personal choice, there aren't many areas of life that aren't taxed, regulated, mandated or banned by government in New Jersey," she said. "We need to ask ourselves whether our economic problems persist despite the big government that we have or because of it."
Ehlbeck will be looking at the states that fared higher in the study to see what they do to make things less confusing for small-business owners. It's a timely survey since many small-business owners are dealing with the red tape that comes with trying to rebuild from Hurricane Sandy.
"Dealing with all of the local, county, state and federal regulations can be very frustrating for a small business with only a few employees," she said. "Nobody has the job of dealing with bureaucracy issues, so the owner has to do it. It's very time-consuming to do all the paperwork and talk to all the right people. It can be a big deterrent for growing their business. The bureaucracy just holds them back sometimes."