Listen to this articleThe New Jersey Business and Industry Association released its 2024 Regional Business Climate Analysis, which found that New Jersey remains at the bottom of the region in terms of business taxes and cost competitiveness.
The study, prepared by NJBIA Director of Economic Policy Research Kyle Surender, rates New Jersey and six surrounding states with a score from 1 (least competitive) to 7 (most competitive) based on six separate cost factors:
New Jersey by the Numbers
- Minimum wage – $15.13
- Highest income tax rate – 10.75%
- Maximum corporate tax rate – 9%
- State sales tax and average local tax rate – 6.61%
- Property tax as a percentage of personal income – 4.76%
- Maximum UI contribution – $2,630.4
New York, Pennsylvania, Connecticut, Massachusetts, Maryland and Delaware were also evaluated.
scorecard
These figures show that New Jersey has the highest corporate business and property tax rates as a percentage of personal income in the region, as well as the second-highest rates in the remaining four categories.
NJBIA notes that the state's 9% corporate tax rate does not reflect the “policy change” made by Gov. Phil Murphy in eliminating the 2.5% CBT surcharge. Gov. Murphy's latest budget proposal includes a new, permanent 2.5% corporate transportation tax after it expires at the end of 2023. NJBIA says the CTF would put the state's most profitable companies back on an 11.5% corporate tax rate, “an extreme outlier nationally.”
New Jersey's overall business environment score of 10 points places it at the bottom of the region for the sixth consecutive year.
Here are the top six, from best to worst:
- Delaware – 34 points
- Maryland – 34 points
- Pennsylvania – 30 points
- Massachusetts – 24 points
- Connecticut – 21 points
- New York – 19 points
“Over the past year, our policymakers have publicly acknowledged that New Jersey is a costly, affordable and regionally competitive state to do business in,” said NJBIA President and CEO Michelle Siekelka. “Unfortunately, their actions belie their words, and it seems irrelevant to them that we are an exception nationwide when it comes to competitiveness.”
Promises, promises
Siekerka stressed that what policymakers are missing is the fact that companies rely on the words and actions of policymakers when considering investments.
“The tax hikes are bad enough, but the way they were implemented through broken promises and lack of notice sends a clear message that job creators don't matter,” Siekerka said. “More than the numbers showing New Jersey is an exception to the cost driver for businesses, we seem to have a mindset that it's okay to make things worse. It's sad for New Jersey's business community that negative attitudes towards major employers are matched by negative numbers. We must do more for business.”
“The proposal for a new permanent 2.5% corporate income tax surcharge will ensure New Jersey remains an outlier both regionally and nationally with regard to business cost drivers,” Surrender said.
He noted that New Jersey companies are stuck in a tax bind, adding, “There doesn't seem to be a mechanism to get them out.”
You can find the full analysis here.
