Hand it to Pennsylvania. Not wanting to have a double-digit corporate business tax, the state set its rate at 9.99% — well above the CBT rate in almost every other mid-Atlantic and Northeast state.
New Jersey isn’t so shy. The state’s corporate business tax sits at a robust 11.5% — not only the highest in the region, but the country.
This is just one of the reasons why New Jersey trails the other mid-Atlantic and Northeast states in the 2022 Regional Business Climate Analysis by the New Jersey Business & Industry Association — which compared seven states (New Jersey, Maryland, Delaware, Pennsylvania, New York, Connecticut and Massachusetts).
New Jersey not only has the highest tax on businesses among the seven states, it also has the highest state sales tax and percentage of personal income paid as property tax.
NJBIA scored the regional rates from 1 (least competitive in the region) to 7 (most competitive). Overall, the higher the total points, the more competitive a state is. New Jersey’s cumulative regional business climate score was 13 after totaling the six categories, ranking seventh in the region. Delaware has the best regional score, at 34.
A look at the rankings:
- Delaware: 34;
- Pennsylvania: 32;
- Maryland: 28;
- Connecticut: 22;
- Massachusetts: 21;
- New York: 21;
- New Jersey: 13.
There’s no formula to absolutely show business climate, but the numbers here are far from good.
NJBIA CEO Michele Siekerka said it’s important to acknowledge the rankings at this time of the year.
“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,” she said.
Inside the analysis
The New Jersey Business & Industry Association’s annual Regional Business Climate Analysis was prepared by Director of Economic Policy Research Kyle Sullender. It observes six factors that affect business competitiveness — minimum wage, top income tax rate, top corporate tax rate, state sales tax rate, property taxes as a percentage of income and the national unemployment insurance tax ranking — to see how New Jersey compares with six states in the region.
“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.”
Siekerka said there needs to be more studying of the situation.
“For the sake of our competitiveness and the health of our businesses, we should all be looking at this data and asking why New Jersey must be such an outlier with our taxes, and seeking comprehensive solutions and reforms during the budget season to improve our business climate,” she said.
A look at how New Jersey did in the categories:
- Minimum wage rate: Tied for fourth best of seven;
- Top income tax rate: Sixth highest of seven;
- Top corporate tax rate: Highest of seven;
- State sales tax rate: Highest of seven;
- Property tax paid as % of personal income: Highest of seven;
- National unemployment insurance tax ranking: Fourth of seven.
For a complete look at the rankings, click here.