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Report: N.J. business tax climate nearly worst in the nation, again

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New Jersey's business tax climate is still nearly the worst in the country, according to the latest annual ranking by the nonpartisan Tax Foundation.

The 2014 ranking, contained in a report released today, ranked the Garden State 49th, ahead of only New York. The report's authors said those in the bottom 10 "suffer from the same afflictions: complex, non-neutral taxes with comparatively high rates."

New Jersey's overall ranking was unchanged from last year, when it rose from dead last to notch the slight improvement to 49th.

But the report said New Jersey and New York "are in a virtual tie for last place this year," alluding to Gov. Chris Christie's vow to keep New Jersey from being last. The Empire State has a better corporate tax ranking, "but its individual income tax suffers from such high rates and narrow bases that New Jersey beats New York ever so slightly."

"If even slight improvements were made to New York's tax system, New York has the opportunity to beat New Jersey's index score," the authors of the report said.

The study considers corporate, income, sales, unemployment insurance and property taxes. New Jersey was ranked 41st in the corporate taxes category, a reflection of its 9 percent corporate tax rate, the researchers said.

The report today became ammunition for the gubernatorial campaigns of Christie and his Democratic opponent, state Sen. Barbara Buono, fresh off of last night's debate.

Kevin Roberts, a spokesman for the Christie said, "This is exactly why Governor Christie has been fighting for tax relief for New Jersey families and businesses since taking office."

"And it's even more evidence that we can't afford the tax-and-spend proposals of Barbara Buono, who drove New Jersey to the bottom of the ranking when she was the architect of the disastrous Corzine budgets," Roberts said in an e-mailed message.

Buono's campaign spokesman had a different take, saying the state's rank "will come as no surprise to the people of this state." The spokesman, David Turner, added that Christie has failed to make good on a pledge to bring tax relief to the residents.

"And when it comes to improving the state's terrible business climate, his focus on doling out tax subsidies to corporations has directly caused an uneven playing field," he said.

Laurie Ehlbeck, state director of the National Federation of Independent Business, also weighed in:

"The good news is that we're no longer dead last. The bad news is that there are still 48 states that are better for business," she said in a prepared statement. "Tax relief hasn't been a high priority for this Legislature and next year that has to change."

The report also led New Jersey Policy Perspective, a Trenton-based think tank, to argue that there's no link between tax rates and the state's ability to create jobs. NJPP President Gordon MacInnes pointed to New York, which was last on the list but has added enough jobs to go above pre-recession levels; New Jersey, meanwhile, has only recovered about half of the jobs it lost, he said.

"Economic opportunity and shared prosperity will only come to New Jersey if we make the investments in the things that matter most to businesses: higher education, safe and reliable transportation networks, clean and safe communities and a well-educated workforce," MacInnes said in a prepared statement.

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Write to the Editorial Department at editorial@njbiz.com

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