New Jersey has once again landed at the bottom of a national ranking for tax policy, according to the latest State Tax Competitiveness Index released by the Tax Foundation. The Index, which evaluates how well states structure their tax systems, placed the Garden State among the 10 lowest-ranked states in the country.
New Jersey joins states like New York and California in the bottom tier, with the analysis highlighting that states in this group tend to suffer from a number of issues, including complex, nonneutral taxes with comparatively high rates.
Hampered by high rates and complex structure
The report points to several specific factors that severely hamper New Jersey’s tax competitiveness:
- Highest Corporate Income Tax: New Jersey currently has the highest-rate corporate income tax in the country.
- High Property and Income Tax: The state is burdened by some of the highest property tax burdens in the U.S. and maintains one of the highest-rate individual income taxes.
- Structural Issues: Beyond the high rates, the report notes that New Jersey’s tax code includes structural complexities such as:
- A particularly aggressive treatment of international income.
- The continued levying of an inheritance tax.
- Maintaining some of the nation’s worst-structured individual income taxes.
In contrast, the top-ranking states, such as Wyoming and South Dakota, often benefit from the absence of a major tax, such as a state-level individual or corporate income tax.
A road map for improvement
The Tax Foundation publishes the Index to provide policymakers and business leaders with a way to compare their state’s tax system and identify areas for improvement.
The 10 lowest-ranked states in the Index are: Hawaii, Vermont, Massachusetts, Minnesota, Washington, Maryland, Connecticut, California, New Jersey, and New York.
Conversely, the 10 best states for tax competitiveness are: Wyoming, South Dakota, New Hampshire, Alaska, Florida, Montana, Texas, Tennessee, Idaho, and Indiana.
