Third-worst: New Jersey

Top personal income tax rate: No. 47 (tie) at 8.97%
Top individual capital gains rate: No. 48 (tie) at 8.97%
Top corporate income tax rate: No. 43 (tie) at 9%
Top corporate capital gains rate: No. 44 (tie) at 9%
Gas tax: 14.5 cents
Wireless tax: 9 cents
Internet access tax: No

With high income and capital gains taxes and the second-highest property taxes (behind New Hampshire), New Jersey earns a reputation among the least small-business friendly states. But it does have low consumption-based taxes, no individual AMT and low gas and diesel taxes.

And maybe that's why the state is still popular with business. "Interestingly, in states like California and New Jersey, despite traditionally high tax rates that makes it difficult for entrepreneurs, there are a significant number of patents filed. The environment for inventions and ingenuity is ripe in those areas, which make them, despite their tax unfriendliness, often successful states from an entrepreneurial level," MyCorporation's Sweeney says.

No-nonsense New Jersey Gov. Chris Christie implemented an executive order in September to implement the "Red Tape Review Commission" in an effort to streamline regulations and reduce unnecessary burdens and costs associated with regulatory compliance for businesses and nonprofits in the state.

Last week the commission issued a progress report. While it had some success easing restrictions on mandatory independent audits for nonprofits and setting up Web-friendly business license applications and filing requirements for Urban Enterprise Zones, there is still a lot of work to be done.

One issue is improving New Jersey's "inconsistent bidding and procurement process," according to the Feb. 8 release by the Office of the Governor. "State departments often have different bidding rules, including specification for binding, margins and typesetting for hard copy bids."

Also on the agenda this year: "examining obsolete permits and outdated and confusing laws."

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