The business tax climate in New Jersey ranked 49th this year out of all 50 states, according to a new report from the Tax Foundation. Only New York received a lower score.

The report looks at the way states structure their tax codes to make them friendly for businesses.

Tax Foundation

"This year, New Jersey and New York are virtually tied for the worst business tax climate in the country," said Scott Drenkard, an economist with the Tax Foundation.

New York, however, has the potential to jump in front of New Jersey this fiscal year, given the creation of Governor Andrew Cuomo's tax reform commission.

"In order to remain competitive with New York, New Jersey will have to vamp up their own tax reform efforts," added Drenkard.

Much of the blame was placed on the Garden State's income tax rate and its highest-in-the-nation property taxes. On a scale of 1 to 10, New Jersey's tax code scored a 3.45.

"The goal of a good tax code is to be economically neutral," said Drenkard. "That means you want to collect revenue for necessary government services, but you don't want the way that your taxes are collected to influence the way businesses act."

A property tax fix would obviously take years, but Drenkard said a more immediate solution would be a reduction in New Jersey's corporate income tax rate, which only brings in a small portion of state and local revenue each year.