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NJBIA Analysis Shows New Jersey Dead Last in Regional Business Climate Competitiveness

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May 3,2018

the staff of the Ridgewood blog

Trenton NJ, With New Jersey’s legislature weighing new tax hikes during budget season, the New Jersey Business & Industry Association released an analysis today that finds the Garden State already ranked last in the region for business climate competitiveness.

“This analysis should serve as an opportunity to reclaim our competitiveness and to improve the state’s economy through comprehensive planning, not excessive taxation,” said NJBIA President and CEO Michele Siekerka. “There is no better time than now to recognize the growing challenges of doing business in New Jersey and our competitive disadvantage with neighboring states.”

NJBIA tracked six individual business costs—minimum wage rate, top income tax rate, top corporate tax rate, sales tax rate, property taxes as a percentage of home value, and the top unemployment tax rate – and compared New Jersey’s rates with those of Connecticut, Delaware, Maryland, Massachusetts, New York and Pennsylvania.

Applying a scoring system to the most and least competitive regional rates, New Jersey finished last of the seven states by a considerable margin.

New Jersey currently ranks last out of all states in the region in top income tax rate (8.97 percent), sales tax rate (6.625 percent) and property tax paid as a percentage of home value (2.16 percent). New Jersey is also sixth out of seven states in top corporate tax rate (9 percent). The Garden State has the third lowest minimum wage rate in the region at $8.60 per hour and, more positively, has the lowest top unemployment tax rate in the region of 5.8 percent.

However, it’s foreseeable that New Jersey’s overall regional business climate could further decline with discussions of a minimum wage increase to $15 per hour, proposals to raise the top income tax rate for those making more than $1 million, and consideration of a Corporate Business Tax increase. These are in addition to the added costs brought on by the mandatory paid sick leave bill signed into law and the proposed sales tax increase to 7 percent.

“It’s important to recognize that New Jersey businesses are already paying their fair share when it comes to tax rates and the additional cumulative costs that are being discussed and proposed could result in stagnation of our businesses, reduced staffing and hours or automation, according to our members,” Siekerka said. “We need tax and regulatory reform to address structural deficits in our economy, such as public pension and health benefits costs, and school funding. We cannot tax our way out of these challenges.”

Using data compiled by NJBIA policy analyst Nicole Sandelier, NJBIA scored the regional rates from 1 (most competitive in the region) to 7 (least competitive). New Jersey’s cumulative regional business climate score was 31 after totaling the six rates. Delaware has the best regional score at 17, followed closely by Maryland at 20. Pennsylvania (23) and New York (24), New Jersey’s largest outmigration states, finished third and fourth, respectively.

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Best-Run States Are Low-Tax Republican, Worst-Run Are High-Tax Democratic, Study Finds

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JOHN MERLINE
7/11/2017

Several states, including Republican states, have decided to raise taxes this year to cover budget shortfalls. But a new study suggests that the states might find themselves in worse financial shape after the money starts rolling in.

According to the latest ranking of states by the Mercatus Center at George Mason University, the most fiscally sound states in the nation are all low-tax, GOP strongholds, while the 10 least-solvent states are almost all high-tax and heavily Democratic.

The rankings in the fourth-annual “Ranking of the States by Fiscal Condition” report, which was released this morning, are based on a review of audited financial statements for 2015 covering five measures that gauge the states’ ability to pay bills, avoid budget deficits, and meet long-term spending needs and cover pension liabilities.

Cash solvency, for example, measures a state’s ability to pay immediate bills. Budget solvency focuses on whether states will end the year with a surplus or deficit. Service-level solvency gauges a state’s ability to meet a demand for increased spending. Long-run solvency looks at a state’s ability to meet longer-term spending commitments. Trust-fund solvency looks at the states’ unfunded pension liabilities and state debt.

There were several changes in the rankings from last year. Florida moved from sixth place to first, while Alaska dropped from first place last year to 17th this year, driven mainly by the fall in oil prices. Idaho moved into the top 10.

At the bottom of the heap, Louisiana and West Virginia both dropped down in the 10-worst list, while Hawaii greatly improved, going from 45th place last year 27th this year. Connecticut, Maine and New York also climbed out of the bottom 10 list. But New Jersey fell to dead last from last year’s 48th place.

The report also includes rankings for each individual measure of fiscal solvency, in addition to the overall ranking. Some states do well on some measures, and bad on others. New Jersey, for example, is last on long-run solvency and second to last on budget solvency, but ranks 24 on service-level solvency.

Nearly bankrupt Illinois is in the bottom in all but one of the five individual measures — service-level solvency.

http://www.investors.com/politics/commentary/best-run-states-are-all-solidly-republican-worst-run-mostly-democratic-study-finds/