N.J. has the worst business climate in the U.S., study says

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New Jersey has the worst business tax climate in the United States, according to a study released Wednesday.The Tax Foundation’s State Business Tax Climate Index ranked New Jersey dead last in overall tax climate.

The foundation measures how each state’s tax code is, by analyzing 100 tax variables in five different tax categories, including corporate, individual income, sales, property and unemployment insurance.

The breakdown of New Jersey’s tax rankings:

• 50^th in property;
• 48^th in individual income;
• 45^th in sales;
• 42^nd in corporate; and
• 25^th in unemployment insurance.

The index says New Jersey is overloaded with some of the highest property tax burdens in the country. It is also one of just two states to have both an inheritance tax and an estate tax, and maintains some of the worst-structured individual income taxes.

Jon Whiten, vice president for New Jersey Policy Perspective, said taxes are just small portion of a state’s business climate.

“This study makes one thing perfectly clear: a state’s ‘business tax climate’ has virtually no connection to the measurement that actually matters, a state’s ‘business climate.’ Taxes are a small piece of a larger puzzle and aren’t close to being the main — let alone the whole — story,” Whiten said.

“New Jersey may rank last on this year’s survey, but that means very little in terms of the state’s ability to grow good jobs.”

 “New Jersey should be concerned about its slow recovery from the Great Recession. 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 most of New Jersey’s good jobs, or the ones with the strongest economies,” he said. “But that’s simply not the case.”

The foundation said it penalizes states for “overly complex, burdensome and economically harmful tax codes” and rewards ones for “transparent and neutral tax codes that do not distort business decisions.”

Surprisingly, a state’s ranking can change dramatically not only due to its own tax decisions, but also from reforms in other states.

The Tax Foundation is a Washington, D.C.-based think tank that collects and publishes data and research studies on U.S. tax policies.

“Our goal with the State Business Tax Climate Index is to start a conversation between taxpayers and policymakers about how their states fare against the rest of the country,” said Tax Foundation policy analyst Jared Walczak. “While there are many ways to show how much a state collects in taxes, the index is designed to show how well states structure their tax systems, and to provide a roadmap for improvement.”

The 10 best states in this year’s index:

10. Oregon
9. Utah
8. Indiana
7. New Hampshire
6. Montana
5. Nevada
4. Florida
3. Alaska
2. South Dakota
1. Wyoming

The 10 worst, or lowest ranked, states in this year’s index:

41. Louisiana
42. Maryland
43. Connecticut
44. Rhode Island
45. Ohio
46. Minnesota
47. Vermont and D.C.
48. California
49. New York
50. New Jersey

Full Report: 2017 State Business Tax Climate Index