September 22, 2009
Bloomberg Highlights Tax Foundation’s 2010 State Business Tax Climate Index, Property Tax Data
"New Jersey, New York Are Worst for Business, Study Says"
By Jerry Hart
New Jersey and New York are the worst of the 50 U.S. states for business because of their tax burdens, a study by the Tax Foundation says.
The two ranked 50th and 49th respectively in the analysis of state personal, corporate, sales, property and unemployment-insurance taxes in the year that ended June 30. The study, released today by the Washington, D.C.-based institute, said South Dakota and Wyoming, which have no corporate or individual income taxes, have the best business climates.
As tax receipts fell in the economic recession, U.S. states faced a combined $165 billion shortage in revenue for the fiscal year that started for most on July 1. New Jersey and New York boosted personal tax rates to help close their gaps.
New York's new top rate of 8.97 percent "is more than 30 percent higher than its previous top marginal tax rate," said Kail Padgitt, an economist who led the study. "The state-local combined rate is the highest in the nation" because New York City also raised personal income taxes, he said.
States that scored the best in the 2010 State Business Tax Climate Index lacked one or more of the five major taxes, Padgitt said. States with all five of the taxes can still score high, he said, such as No. 10 Utah.
"The key is to maintain low rates by taxing broad bases," Padgitt said. Incentives that "carve out" tax privileges to lure businesses don't increase a state's long-term competitiveness, he said.
