A report by New Jersey’s Division of Taxation on taxation and the impact of the state’s restrictive corporate tax laws found that while New Jersey has seen revenue growth in recent years, it has lost out on its tax revenue from corporate profits to the states with lower taxes.
According to the report, the state has generated $2.5 billion in revenue from tax revenues in 2016, with a $1.6 billion deficit, while the states in which New Jersey ranks are Massachusetts, New York, California and Pennsylvania.
“We see revenue gains across the board across the states, from business and individual income taxes to corporate income taxes, and we are seeing a significant impact on corporate income tax,” said Chris DeLong, the director of the division of taxation and a partner at law firm DeLong & Sullivan.
The report found that, despite the state making substantial progress in reducing the corporate tax burden, the tax burden for corporations remained high in the state.
For example, New Jersey corporations pay a federal corporate income and payroll tax rate of 21.4 percent.
The corporate tax rate for New York is 15.6 percent.
While New Jersey is the only state in the country to impose a 25 percent corporate tax on income earned by foreign multinationals, the rate is only 10.4 for individuals and is 15 percent for corporations.
In contrast, New Hampshire’s corporate tax is just 3.2 percent, while Pennsylvania’s is 14.5 percent.
In addition, corporations have an effective federal corporate taxrate of 15.8 percent, meaning that they owe $9.4 billion in taxes.
In New Jersey, the effective federal rate is 15, while in Pennsylvania it is 15%.
According to DeLong’s analysis, New England states are also losing out on their corporate tax revenues.
New York and Massachusetts have the lowest effective federal rates, while Vermont and Rhode Island are the only states in the union that have an income tax rate below 17 percent.
DeLong said New Jersey can continue to attract foreign corporations and help the state recover some of the lost tax revenue.
But, he said, the new tax legislation, which has been approved by the legislature, will have a significant effect on New Jersey and its economy, which is dependent on business investment and the creation of jobs.
“If we do nothing, our economy will be on the decline,” DeLong said.
The New Jersey tax on profits from overseas corporations was approved by a vote of 60-39 on May 29, and was expected to be approved by all New Jersey lawmakers.
But the legislation, as it stands now, allows for deductions for the state income tax and certain other taxes.
DeLaurent DeBartolo, the legislative director for the New Jersey Taxpayers Alliance, a business group that represents corporations, said that, while it was important to have corporate profits taxed, he and other groups are not convinced the legislation will lead to a major economic rebound.
“New Jersey has not been able to attract a significant number of foreign multinational corporations,” he said.
“As a result, our state has fallen behind on revenue and is facing a significant deficit, which will likely drive us into recession and will make it more difficult to attract investment.”
DeLong’s report found the New York corporate income rate has remained consistently below 17.5.
For individuals, New Mexico has an effective rate of 14.4.
The highest effective rate in the nation is in Connecticut at 14.9 percent.
New Jersey currently has the lowest state rate in New York at 16.3 percent.According