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Retail Disaster : New Jersey Ranked Even Worse than New York in Sales Tax

Phil Murphy

the staff of the Ridgewood blog

Ridgewood NJ, according to the Tax Foundation New Jersey scored near the bottom , ranked 45th as on of the lowest-scoring states having a high sales tax rate, high excise tax rates, or apply the sales tax to a variety of business inputs. The states with the lowest scores on this component are Louisiana, Washington, Alabama, Arizona, Tennessee, and New Jersey.

Katherine Loughead a Policy Analyst with the Center for State Tax Policy at the Tax Foundation wrote , “A state’s sales tax rate and structure can make a state more or less attractive to businesses for two key reasons: (1) some states apply the sales tax to business inputs, which drives up the costs of production, and (2) as sales tax rates increase, consumers may cut back on purchases or move their shopping to lower-tax jurisdictions.”

This is just another shot to the struggling bricks and mortar retail industry in Ridgewood Central Business district as well as in surrounding towns like Paramus and Hackensack with house large shopping malls. New York at #42 , Connecticut #30 , Pennsylvania #21 , Delaware #2 and Maryland #18 all offer lower sales taxes making it even more difficult for New Jersey to attract shoppers . If you add the increased gas tax and the high tolls it spells retail-apocalypse .

She goes on , “An ideal sales tax applies to a broad base of final consumer goods and services, with few exemptions, and is levied at a low rate. Broad-based, low-rate tax structures minimize tax-induced economic distortions that can occur when consumers alter their purchasing behavior due to tax differentials. In addition, sales tax exemptions narrow the tax base, driving up the sales tax rate on those goods and services that remain subject to the tax, making the rate higher than otherwise necessary.

Importantly, a well-structured sales tax applies to the end-user at the point of sale but does not apply to the sale of machinery, raw materials, and other business inputs, as those taxes increase the costs of production and ultimately get passed along to consumers in the form of higher prices. States that avoid taxing business inputs perform better on the Index.”

https://files.taxfoundation.org/20180925174436/2019-State-Business-Tax-Climate-Index.pdf#page=37

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