NJ Fiscal Folly

Wednesday, March 01, 2006

It's Not Just Property Taxes

The Tax Foundation has just released the latest version of the State Business Tax Climate Index.

New Jersey ranked #49 overall (down from #47 previously). Only New York was worse.

The State Business Tax Climate Index is based on five components:

(1) a Business Tax Index
(2) an Individual Income Tax Index
(3) a Sales and Gross Receipts Tax Index
(4) an Unemployment Tax Index
(5) a Wealth Tax Index

The Business Tax Index is based on business tax rates and the business tax base (including the definition of taxable income). NJ ranked #50 on this index (down from #47 previously).

For the Individual Income Tax Index, NJ ranked #46 (down from #37 previously).

For the Sales and Gross Receipts Tax Index, NJ ranked #27 (down from #23 previously). However, Gov Corzine is apparently considering a gross receipts tax, so our ranking here will probably deteriorate more in the future.

For the Unemployment Tax Index, NJ ranked #27 (down from #26 previously). However, the state's Unemployment Insurance Trust Fund is nearly insolvent, due to constant diversions to fund other state programs. An unemployment insurance tax increase is unavoidable. Hence, NJ's future ranking will deteriorate here as well.

The Wealth Tax Index includes a variety of items, such as property taxes, capital stock taxes on corporations, asset transfer taxes, etc. NJ ranked #46 on this index (a slight improvement from #48 previously).

New Jersey is a state with many resources and talented people, but these are serious numbers. Who will remain to pay the bills when there are so many better alternatives elsewhere?

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