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K&D Resource Areas
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New Jersey Ranked Last in 2010 State Business Taxes New Jersey has the least "business-friendly" state tax system according to the Tax Foundation's recently released 2010 State Business Tax Climate Index. New Jersey remained last, as it was in the Foundation's 2009 Index. As observed by the New Jersey Business and Industry Association: New Jersey's ranking comes despite positive changes to New Jersey's corporate tax structure enacted by the Governor and the Legislature. The State extended the carry-forward period for net operating losses to 20 years and eliminated the throw-out rule, which allowed New Jersey to tax business income earned in other states, and the regular-place-of-business rule, which forced small businesses to open facilities in other states in order to have their business’ out-of-State income non-taxable in New Jersey. However, there were also increases in the unemployment tax as well as individual income of more than $400,000 per year. Weekly News Bulletin — September 25, 2009 The Index does not measure a state's overall business climate. The Index is a measure of the tax component of each state's business climate but there are many non-tax factors that affect a state's overall business climate. The Index is intended as a measure of the competitiveness of the 50 states' tax systems and ranks them accordingly based on the taxes that matter most to businesses and business investment: corporate income, individual income, sales, property and unemployment insurance taxes. The states are scored on these taxes, and the scores are weighted based on the relative importance or impact of the tax to a business. The Tax Foundation's Index has been criticized as a large and complex undertaking that ends up generating a number that bears little relation to the actual taxes falling on new business investment in a state. See: Grading Places - What Do the Business Climate Rankings Really Tell Us? by Peter Fisher Click here for the Tax Foundation's full press release. View Tax Foundation Background Paper No. 59, "2010 State Business Tax Climate Index." View an audio slideshow on the study's results.
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