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N.J. ranked dead last in a Small Business Tax Climate poll … and why that shouldn't bother you a bit

Small Business Tax Climate survey? NJPP is not impressed.
Small Business Tax Climate survey? NJPP is not impressed. - ()

Another business survey and another blow for New Jersey, or so it may seem at first glance.

The Tax Foundation’s Small Business Tax Climate Index ranked the 50 states on how their tax systems compare — and New Jersey finished dead last.

Out of the 50 U.S. states, the Garden State finished 50th overall, as well as 50th in property tax rank, the Tax Foundation said. Not that it fared much better when it came to other taxes: New Jersey was 32nd in unemployment insurance tax rank, 41st in corporate tax rank and 48th in both individual income tax rank and sales tax rank.

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“The states in the bottom 10 suffer from the same afflictions: complex, non-neutral taxes with comparatively high rates,” the Tax Foundation said. “New Jersey, for example, suffers from some of the highest property tax burdens in the country, is one of just two states to levy both an inheritance and an estate tax, and maintains some of the worst structured individual income taxes in the country.”

However…

New Jersey Policy Perspective President Gordon MacInnes was not impressed or concerned with the seemingly gloomy results.

"The Tax Foundation’s State Business Tax Climate study makes one thing perfectly clear: a state's ‘business tax climate’ has practically no connection to the measurement that actually matters, a state's ‘business climate,’” he said in a statement. “In other words, taxes are merely a small piece of a larger puzzle and aren’t close to being the main, let alone the whole, story.”

The presence of good jobs, and New Jersey’s ability to add more, is more important than number-crunching the state’s taxes, NJPP added.

It pointed out that New York ranked 49th in the study, while California ranked 48th, for instance, and these are states known as the home of major, successful businesses.

“New Jersey, it is true, should be concerned about its slow recovery from the Great Recession and take note of where good jobs have gone,” MacInnes said. “Given the Tax Foundation’s emphasis on ‘tax climate,’ one might expect the states with the highest rankings to be the ones that have been taking New Jersey’s good jobs.

“But that’s simply not the case.”

NJPP said the high-paying jobs in the technology and pharmaceutical industries that have left New Jersey are not going to the states that fared well on the survey, such as Wyoming and South Dakota. They have instead gone to New York, California and other higher-tax states.

MacInnes also made clear that New Jersey needs to work to keep what it has, as well.

“New Jersey became an economic powerhouse because it has the assets to attract well-paying jobs and the people who come with them,” he said, citing examples such as transportation, good schools and an educated workforce. “… But like all assets, these require maintenance, modernization and new investment to retain their value. New Jersey’s policymakers need to focus on shoring up and building upon these competitive advantages, not on cutting tax rates and public services.”

To read the study and see its rankings, click here.

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