Trenton – Governor Christie and the
Legislature are suddenly facing an $800-million budget deficit. The main cause, according to the state
Treasurer, is declining revenue from the income tax. If history is a guide, some lawmakers and
activists will call for higher taxes to plug the hole.
as the Governor suggested at a recent news conference, high taxes may be the
illness, not the cure.
2001 and 2010 New Jersey lost a net 179,000 income tax filers, according to IRS
data compiled by the nonpartisan Tax Foundation. They left with more
than $13 billion in adjusted gross income.
The largest group, 72,000, moved to Florida where there is no income
will argue that New Jerseyans are moving to Florida because the weather is
better. Perhaps that’s true for some. But it doesn’t explain why 32,000 income tax
filers moved to Pennsylvania, or why thousands more relocated to Maine,
Massachusetts, New Hampshire and other places where the weather is colder and
the winters are longer.
those states have in common with Florida is a much more hospitable tax
climate. Florida, of course, has no
income tax. Neither does New
Hampshire. New Jersey has one of the
highest income taxes in the country. A
couple here making $150,000, for example, pays 5.525 percent or nearly $8,300. In Florida or New Hampshire they’d keep that
money. A small business owner whose
company earns $300,000 would pay more than $19,000 to Trenton. In Florida she would be able to reinvest that
money to make her business grow.
top tax rate in New Jersey – for people earning more than $500,000 – is 8.97
percent. The top tax rate in
Pennsylvania is 3.07 percent. Now, half
a million dollars is a comfortable income by any standard. But $30,000 is a lot of money too, and that’s
what an affluent taxpayer in New Jersey can save every year by moving just
across the Delaware.
forget that New Jersey also imposes the highest property taxes in America and its
sales tax is higher than all but a handful of states. Add it all up and moving out of New Jersey is
an easy decision for the people who can most easily move.
data for the last decade confirms the trend.
A new Gallup Survey indicates that it’s not just
overburdened taxpayers, however, but career seekers who also want to
to Gallup, 41 percent of New Jersey residents would leave the Garden State if
they could. Their reasons varied, but a
plurality of respondents said they’re looking for business or work
opportunities. That should be troubling
to policymakers in Trenton. More than
four in 10 residents believe the grass is greener somewhere else.
could blame them? The state’s
unemployment rate remains stubbornly higher than the national average and its
economy is growing more slowly. And they
pay the highest taxes in the country.
That’s not only a barrier to small business formation, traditionally a
path to the middle class, but a burden on middle class workers and
professionals who can give themselves a raise simply by moving.
has been modest progress. Three years
ago Governor Christie and Democratic leaders undertook bipartisan reforms that
slowed the growth of property taxes. But
property taxes were already too high.
Slowing them down is like preventing your headache from getting
worse. Relief means lower, not slower,
small businesses pay income taxes, not corporate taxes. Ours is extremely high. And it’s producing sharply less revenue. Would raising it, then, have a different
result? Or would that accelerate the migration
of income tax payers to states that let them keep more of what they earn?
economic and fiscal problems have been in the making for decades. They result from a political culture in
Trenton that misunderstands the people of New Jersey. If high taxes and extravagant programs were
popular beyond politicians and interest groups, we’d have to build a wall
around the state to keep others out. We
want real economic opportunities, and they don’t come from government.
CHECK OUT LAURIE’S EDITORIAL IN THE Asbury Park Press Here: