Guess which state was dead last in business tax – again

New Jersey’s tax climate for businesses is once again the worst in the nation, a report released Tuesday found.

The Tax Foundation study said the Garden State is hamstrung by high property taxes (50th), a high sales tax (48th), a high income tax (48th) and a high corporate tax (41st), enabling it to outdistance New York, California and Minnesota for the dubious distinction.

“I still think it’s a strain on employers and whether or not they’re going to be able to stay in New Jersey and create more jobs,” said Cristina Amyot, president and chief executive officer of Enform HR, a human resources consulting firm based in Middletown.

The Tax Foundation is a Washington, D.C., research group that lobbies for low taxes.

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Its results amounted to a dog-bites-man story; New Jersey’s business tax climate ranked 50th last year, too. But it comes as a recent Asbury Park Press series looked at why New Jersey’s job market is floundering. The state has lost its grip on the giant drug companies and casinos that once provided reliable growth, no matter the tax rates. And its suburban landscape that once suited Americans’ tastes has fallen out of favor.

Calling for reform

The Tax Foundation’s report gave ammunition to lawmakers and business groups that long have called for tax reform.

Compare New Jersey with Massachusetts, a state that it is battling for high-paying technology and pharmaceutical jobs.

New Jersey’s top individual tax rate is 8.97 percent for incomes of $500,000 or higher; Massachusetts’ income tax rate is 5.2 percent across the board. New Jersey’s property tax rate is $2,896 per capita; Massachusetts’ rate is $2,022. New Jersey’s top corporate income tax rate is 9 percent for companies with profits of more than $100,000; Massachusetts’ rate is 8 percent across the board, according to the Tax Foundation.

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The result: Massachusetts, considered a typically expensive Northeast state, ranked 24th in the study.

“Our ranking of 50th place sends a clear signal that it is time for far-reaching tax reform that can only be accomplished by legislative action,” said Laurie Ehlbeck, director of the National Federation of Independent Business in New Jersey, a small business trade group.

Gov. Chris Christie didn’t respond to a request for comment.

The top official from Choose New Jersey, a privately funded organization created by the Christie administration in 2010 to recruit employers from other states, said New Jersey’s taxes are offset by its highly educated workforce, transportation and telecommunications infrastructure and tax incentives.

“That being said, New Jersey’s climate for growing and attracting businesses would benefit from a more competitive tax structure, especially when compared to our neighboring states,” Tracye McDaniel, the group’s president and chief executive officer, said in a statement.

Spending cuts

Any proposal to lower taxes, however, would need to be offset by cuts in expenses. New Jersey lawmakers last year had to fill a budget gap of more than $800 million, and the state this year is searching for ways to replenish the transportation trust fund, which finances road and bridge improvement projects. It is scheduled to run out of money in June.

Critics dismissed the Tax Foundation report, saying there is little connection between a state’s business tax climate and its job growth.

While New Jersey from September 2013 to September 2014 ranked 49th in job growth, other high-cost states fared better. Minnesota, for example, ranked 47th in business taxes, but 24th in job growth. California, 48th in business taxes, was 21st in job growth, according to the U.S. Bureau of Labor Statistcs.

On the flip side, South Dakota, with the Tax Foundation’s second-best business tax climate, ranked 46th in job growth. And Alaska, with the fourth-best business tax climate, ranked last, the figures showed.

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“Our high-paying jobs in technology and pharmaceuticals have not fled to low-tax Wyoming, South Dakota, Nevada and Alaska,” said Gordon MacInnes. president of New Jersey Policy Perspective, a left-leaning research group. “Instead, they have gone to California, New York and Massachusetts.”

Some New Jerseyans wonder if they should move to states that are less expensive.

Amyot at one point was among them. She and her husband live in Jackson with two sons, ages 9 and 7. They are in New Jersey because she went to Rutgers University for a master’s degree in human resource management and then started her own business.

She said they talked about moving to North Carolina (16th in business climate, eighth in job growth), but most of her clients and children’s friends are here. They decided to stay.

“My feeling is, if you’re in New Jersey, you better be here for a reason,” Amyot, 40, said. “You better be going to Philadelphia or New York City or the beaches. You better be taking advantage of the area. If you are just going to work and coming home, what are you paying for?”

Michael L. Diamond:

732-643-4038; mdiamond@app.com

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