For the first time in five years, New Jersey does not have the worst business tax climate in the nation, according to an annual 50-state report
released Tuesday (October 26) by the Tax Foundation, a Washington, D.C., research and advocacy group that pushes for lower taxes.
Earlier this year, Republican Governor Chris Christie vetoed a Democratic proposal to extend higher personal income tax rates for the state's wealthiest residents. The decision - which became
one of the sharpest political battles of the year between Christie and Democrats -
reduced New Jersey's top tax rate from 10.75 percent to 8.97 percent. According to the Tax Foundation, it also helped the state move up two spots in the group's national rankings.
"This may be small consolation for New Jersey taxpayers," Tuesday's report notes, "but after four consecutive years ranking 50th, any improvement is welcome."
Nationally, the report finds that South Dakota, Alaska, Wyoming, Nevada, Florida, Montana, New Hampshire, Delaware, Utah and Indiana have the top 10 friendliest tax systems in the nation for businesses. North Carolina, Rhode Island, Minnesota, Maryland, Iowa, Ohio, Connecticut, New Jersey, California and New York are the worst 10 states.
The analysis looks at all state taxes, and states without sales or income taxes naturally fare better in the rankings, even if such systems can cause volatility. Nevada, South Dakota and Wyoming, for example, all have no personal or corporate income tax, which may be attractive to businesses even as it can subject those states to extreme swings in revenue depending on the economy.
The report's findings, which are always closely watched, are certain to be mentioned on the campaign trail in the frantic final days before voters in 37 states choose new governors.