PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

State of the Week: NEW JERSEY

By at 12 June, 2017, 10:09 am

Can Anyone Lead the State Out of Its Deep Policy Hole?

by Raymond J. Keating-

Small Business Policy Index 2017: New Jersey ranked 49th, or second worst, among the 50 states.

SBE Council’s “Small Business Policy Index 2017” ranks the 50 states according to 55 different policy measures, including a wide array of tax, regulatory and government spending and performance measurements.

Small Business Tax Index 2016: New Jersey also ranked 49th, or second worst, among the 50 states.

SBE Council’s “Small Business Tax Index 2016” ranks the states according to 25 different tax measures. Among the taxes included are income, capital gains, property, death, unemployment, and various consumption-based taxes, including state gas and diesel levies.

New Jersey’s Policy Hole

When it comes to policies that impact entrepreneurs and small businesses, New Jersey is a state in a very deep hole.

Indeed, the state ranks second worst on both the “Small Business Policy Index 2017” and on the “Small Business Tax Index 2016.” The list of ills is a long one.

For example, as illustrated in the “Small Business Policy Index 2017,” New Jersey imposes the highest property tax burden, and very high personal income, individual capital gains, corporate income and corporate capital gains taxes, a high gas tax, a high energy regulatory burden, the second highest workers’ compensation costs, high levels of state and local government spending and debt, a death tax, an added minimum wage mandate, very poor protections from eminent abuses, and is not a right-to-work state.

As for the two terms of Governor Chris Christie, the best that can be said really is that he was able to stop things from getting even worse – and in fact, many state legislators wanted to make matters far worse. Now, Governor Christie is in his last year in office. On Tuesday, June 6, primaries were held to determine who the major party candidates for governor would be.

Phil Murphy, a former Goldman Sachs executive, won the Democratic Party’s nod, and he will square off against Republican Lt. Governor Kim Guadagno.

The winner in November obviously will face a daunting task in making New Jersey a competitive, affordable state for individuals, entrepreneurs, businesses and investors.

It must be noted, for example, that among New Jersey’s top exports are people.

Over the period of 2010 to 2016, New Jersey ranked fourth worst in terms of net domestic migration (that is, movement of people between the states (change in population less births, deaths and international migration), losing more than 336,000 people net to other states. Only New York, Illinois and California were worse. Obviously, many people view their departure from New Jersey as a path to enhancing opportunities.

Can anyone lead New Jersey out of these depths? Well, only if they are serious about substantive tax and regulatory relief. Otherwise, it’ll be business as usual in New Jersey – and that’s not been good for small business or the residents of the state who view an exit from the state as the best option for a better life.

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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP:  The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.

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