TRENTON, NJ – As Governor Phil Murphy focuses his political efforts to fulfill his progressive social justice agenda, the business climate in New Jersey is suffering. In a New Jersey Business & Industry Association report, New Jersey has the worst business climate in this part of the United States.
While the governor is focused on topics such as gender studies in schools, social policing reform, freeing thousands of inmates from prison, and other ideologically progressive ideals, he is losing sigh on the backbone of the Garden State, its business community. Still reeling from the prolonged pandemic shutdown that crippled thousands of businesses and closed thousands more, New Jersey has a long way to go before calling itself business-friendly.
Now, as legislators look to develop a national marketing campaign to tout the business opportunities in New Jersey, there’s a lot of work to make sure that the marketing campaign isn’t just a snake oil sales pitch.
As part of its recent budget testimonies provided to the Legislature, NJBIA has released its updated 2022 Regional Business Climate Analysis showing New Jersey continues to significantly trail the rest of the region in business climate.
New Jersey has the highest corporate tax rate in the nation, so making a pitch to large businesses to expand from more business-friendly states to the Garden State may be a problem.
“The analysis shows New Jersey is maintaining the highest corporate business tax rate, state sales tax rate and property tax paid as a percentage of personal income, as well as the second highest top income tax rate, in the region,” said Bob Considine, communications director for the NJBIA.
In its report, NJBIA analyzed six individual business cost drivers in seven states and, using a scoring system of those metrics, determined New Jersey ranks at the bottom overall behind Massachusetts, Connecticut, New York, Pennsylvania, Maryland and Delaware.
“As we go through the budget season, it’s important that our policymakers understand how much of a regional and national outlier New Jersey is in terms of taxes and the cost of doing business,” said NJBIA President & CEO Michele Siekerka. “We all know and appreciate the current attention paid toward affordability. But for businesses – particularly our smaller businesses that faced the longest shutdowns and restrictions in the nation during the pandemic and are also facing $1 billion in unemployment tax increases over three years – there is still a long way to go to bring them affordability.”
Compared to the six other states, New Jersey has the top corporate tax (11.5%), state sales tax (6.63%) and property taxes paid as a percentage of income (4.98%). New Jersey’s income tax rate of 10.75%, formerly the top rate in the region, has been surpassed by New York’s 10.9% income tax rate.
Massachusetts currently has the top minimum wage rate of $14 per hour. However, Connecticut’s current $13 rate will increase to $14 in July, while New Jersey is also slated to increase to $14 per hour on Jan 1, 2023.
New Jersey’s top corporate tax rate of 11.5% is actually the highest rate in the nation. In 2018, New Jersey’s corporate tax rate went from 9% to 11.5% in what was termed a “temporary increase.” It was originally scheduled to phase down to 10.5% in 2020 and back to 9% in 2021.
Instead, the 2.5 percentage point surcharge was extended by the Legislature in 2020 until the end of 2023.
“New Jersey’s top corporate tax rate of 11.5% is probably the most glaring,” Sullender said. “It’s the only double-digit state corporate tax rate in the nation.
“Now we hear of Pennsylvania looking to greatly reduce its 9.99% corporate tax rate, which is second worst in the region. If that happens, and New Jersey maintains its current corporate tax rate, our state will be even more of an outlier in the region – and that does not help our overall competitiveness,” Sullender said.