(The Center Square) — As New Jersey Gov. Phil Murphy’s supporters tout his record of cutting taxes and expanding jobs, the state has again ranked last in the nation in a new business tax climate report.
The Tax Foundation’s 2024 State Business Tax Climate Index ranked New Jersey 50th in overall taxation, a spot it has held for several years. In the individual income and corporate tax categories, the state was ranked 48th in the nation, followed only by Delaware and California, according to the report.
The report’s authors said New Jersey is “hampered by some of the highest property tax burdens in the country, has the highest-rate corporate income taxes in the country, and has one of the highest-rate individual income taxes.”
“Additionally, the state has a particularly aggressive treatment of international income, levies an inheritance tax, and maintains some of the nation’s worst-structured individual income taxes,” they wrote.
Despite New Jersey’s rock-bottom ranking, the report’s authors said bright spots on the horizon could improve the state’s future tax climate scores.
The group cited changes to New Jersey’s corporate income tax code, including reducing the taxation of Global Intangible Low-Taxed Income from 50% to 5% beginning this year.
“This change will help New Jersey’s corporate tax component score in the future,” they wrote. “However, that same law will also newly conform New Jersey to the 80% federal limitation on NOL carryforwards without adopting a corresponding unlimited recovery period included in federal law.”
The report’s authors also noted that New Jersey’s 2.5% corporate business tax surcharge is scheduled to expire at the end of 2023, which would lower the top marginal corporate income tax rate from 11.5% to 9% unless lawmakers extend it again.
“If the surcharge is indeed allowed to expire, New Jersey’s corporate tax component score will improve in the future,” the foundation wrote.
Murphy, a Democrat and businessman barred by term limits from running for reelection, is trying to shore up his legacy as he rounds out his second and final term.
A nonprofit group with ties to Murphy is running a series of praising the governor and his Democratic allies in the Legislature for “turning New Jersey’s economy around.”
“They’ve cut taxes for working families and seniors 20 times, making New Jersey more affordable, and ignited our economy with new jobs and record growth,” a narrator says in the ad. “New Jersey is the most improved state in the nation to do business and the safest in the country.”
But Republicans said the latest tax climate report shows that the cost of living and doing business in New Jersey is still too high with record inflation and other financial pressures.
Senate Republican Leader Anthony M. Bucco said, “Murphy’s failed progressive priorities have hampered New Jerseyans with some of the highest tax burdens in the country.”
“It is indefensible that Governor Murphy and Trenton Democrats continue to avoid the real issues while everyday New Jerseyans suffer under the crushing weight of the cost-of-living increases created by those very progressive policies they support,” he said in a statement.
