Gov. Murphy has been loudly touting New Jersey’s ratings upgrades from the three major bond-rating agencies. The upgrades are indeed good news – so far as it goes. New Jersey has benefited from record tax revenues as well as billions in federal dollars, which has allowed Murphy to make full pension payments, pay down some debt and build a small rainy day fund. But don’t forget that Murphy raised both individual and corporate taxes and increased government spending by 38% to record levels in order to do so. For such elevated spending to be sustainable, New Jersey needs a thriving economy. But New Jersey’s economy is not thriving, which is clearly indicated by a host of new numbers on New Jersey’s tax burden and jobs economy.
Corporate Taxes Highest in Nation. Sunlight’s readers already know that according to the Tax Foundation, New Jersey has had the worst tax climate for businesses in the nation for every year of Murphy’s tenure. Recently, the Tax Foundation updated its numbers for state corporate taxes, and New Jersey’s are the highest in the nation, as is our combined 30% federal and state tax burden.
State Corporate Tax Rates (2022)
Weak Jobs Recovery. An inhospitable business climate has negative consequences for New Jersey’s jobs market. Pew Charitable Trusts recently updated its workforce participation numbers, and New Jersey’s recovery from pandemic job loss has significantly lagged the rest of the country. New Jersey’s participation rates from prime age workers (29-54) is still -2.4% below what it was in 2019, which makes for the 9th-worst recovery from the pandemic. The national average is a decline of -0.9%.
This has implications for Murphy’s unsustainable government spending . According to Pew, “For state governments, substantial declines in employment rates can potentially suppress tax revenue and raise demand for social services.” That is, a lousy business climate and fewer people working means lower tax revenues and higher government spending in the future.
Property Taxes highest in Nation. The Tax Foundation also recently updated its property tax rankings and New Jersey property taxes are the highest in the nation by a significant margin. Indeed, Bergen, Essex, Passaic and Union Counties are four of the top ten highest property tax counties in the nation. Murphy touts his temporary tax rebates but these barely put a dent in New Jersey property tax burdens, and in any event the recently announced healthcare premium hikes for government workers will result in permanent property tax increases.
Property Taxes as a Percentage of Home Value (2020).
All these recent updates indicate that New Jersey is not out of the woods. Under Murphy, we continue to be a lousy state for businesses, workers and homeowners. That bodes ill for government finances down the road. Murphy will be long gone, the ratings agencies can downgrade as easily as upgrade, but New Jersey citizens will be stuck with the consequences.