For five years leading up to 2004, New Jersey was a cash magnet. Some $98 billion flowed into New Jersey from out of state during that time.
Then, state lawmakers enacted a host of tax increases, including hikes in income, sales and property taxes and in the “millionaire tax.”
Since then, households hit hard by the rising taxes have been bailing out of New Jersey faster than the state can replace them. Many have been going to lower-tax states, a new study from Boston College has found.
The result? New Jersey lost more than $70 billion in wealth between 2004 and 2008, The Star-Ledger newspaper in Newark reported.
Some “class-envy” warriors might bid those leaving the state good riddance, but their exit is taking a toll. Major givers to charity are among those who are departing, and their philanthropic dollars are going, too. State tax revenue is also plunging in the current recession even faster than it is in other states. That’s because the wealthiest 1 percent of New Jersey’s residents pay a whopping 40 percent of its income taxes, and many of them are leaving.
In addition, “Those who left were also more likely to be older and more educated, with jobs as entrepreneurs or in the finance and professional industries,” The Star-Ledger reported. That means New Jersey is driving out many of the very people who are most likely to create jobs and engage in the private spending and investment needed to spur the economy.
One accountant said he had never in 30 years seen such an exodus of people for “purely tax reasons.” And a public policy expert at Rutgers University declared that without tax reform, “we’ll probably see a continuation of the trend, until there are no more high-wealth individuals left.”
Unfortunately, politicians seldom think about the consequences before they raise taxes.