For many Americans, Tuesday, April 15 is the deadline to see exactly how big a bite the government has taken out of their paychecks for the previous year. 

But as the annual deadline for filing tax returns arrives, the New Jersey Policy Research Organization (NJPRO), the research affiliate of the New Jersey Business & Industry Association (NJBIA), takes a look at another bite New Jersey’s tax structure is taking—a bite out of State’s ability to create private-sector jobs. 

NJPRO’s recently released Facts for Discussion issue paper analyzes several rankings and comparisons between New Jersey and the nation, and how New Jersey’s poor tax climate is suppressing private-sector job growth. 

“New Jersey’s reputation as a high-tax, high-cost State is well established.  NJPRO wanted to look at what impact this was having on our ability to create private-sector jobs,” NJPRO Deputy Director Christopher Emigholz said. 

“What we found is that New Jersey has lagged behind in private-sector job creation compared against its own past performances,” Emigholz said.  “Clearly, our poor tax environment is having an impact.”

The NJPRO paper, entitled New Jersey’s Tax Climate - How Taxes are Affecting New Jersey Industrial, Commercial and Small Business Sectors, notes that between December 2000 and December 2007, New Jersey created an average of only 543 new private-sector jobs per year, even as the public sector increased its employment by 54,800 jobs during the same period, accounting for almost 94 percent of the newly created jobs in New Jersey.

NJPRO also analyzed New Jersey’s competitiveness with neighboring states.  New Jersey ranked 49th in nation in its business tax climate, according to the National Tax Foundation.  By comparison, Pennsylvania, ranked 27th; New York, 47th; and Delaware, 9th.

New Jersey also has the 7th highest electricity costs for industrial users and 11th highest for commercial users.  New Jersey imposes a 7 percent sales tax on electricity as well as a Societal Benefits Charge and a Transitional Energy Facility Assessment totaling 6.5 percent.  New York charges a 4 percent sales tax, Pennsylvania, 6 percent, and Delaware, which has no state sales tax, charges a 4.25 percent Public Utilities Tax on the distribution of electricity.

New Jersey is well known as having the highest per-capita property tax rates in the nation, which has a tremendous impact on business property owners, not just homeowners.  The State also has the 8th highest top corporate tax rate, and the 6th highest top tax rate for personal income.  New Jersey is also one of the few states that does not provide standardized income tax deductions, taxing a larger portion of an individual’s income.

The Facts for Discussion piece concluded:  “Future economic growth in New Jersey is contingent on policymakers in Trenton reforming the policies toward business taxation to ensure that New Jersey will be competitive in the global market.  “A healthy business climate in New Jersey is essential to promoting a high quality of life for all residents of the Garden State.”