As many, including Sunlight, have long warned, New Jersey is approaching a fiscal cliff.  Gov. Murphy is now ordering departments freeze salaries and hiring and reduce budgets by 5%.  Murphy claims that he has been a good fiscal steward, but remember that he has increased state spending by over 60% and the current state budget has a topline of $56.6 billion, with a structural deficit of $2.1 billion.  The usual cast of characters — Murphy’s government union pals and their allies — are already calling for higher taxes.  But New Jersey already has among the highest taxes in the nation, which hurts New Jersey’s businesses and economy and drives taxpayers and wealth out of the state.

Don’t take our word for it.  Listen to New Jersey’s business leaders. In the New Jersey Business & Industry Association’s 66th Annual Business Outlook Survey, two of the top three concerns for New Jersey’s businesses were property and corporate taxes.  The other is New Jersey’s very high cost of doing business, which is of course related to high taxes.  There’s a reason why New Jersey has ranked 49th or 50th among the states for tax competitiveness for every year Murphy has been in office.

High taxes also drive the outmigration of taxpayers and wealth from New Jersey to other states with lower taxes.  A recent Tax Foundation analysis found that from 2021-22, New Jersey had the 5th-worst loss of taxpayers in the nation, losing -20,820 taxpayers and -$5.27 billion in wealth.  And remember that this wealth has left New Jersey not just for 2021-22, it has most likely left New Jersey forever, so this loss will be felt for many years into the future.

Here are the five biggest losers:

50. California (-144,203)
49. New York (-108,586)
48. Illinois (-45,460)
47. Massachusetts (-26,033)
46. New Jersey (-20,820)

Conversely, here are the five biggest winners:

1. Florida (+125,551)
2. Texas (+88,216)
3. North Carolina (+43,653)
4. South Carolina (+32,927)
5. Tennessee (+30,935)

The Tax Foundation concluded:

[T]here is a strong positive relationship between state tax competitiveness and net migration. Overall, states with lower taxes and sound tax structures experienced stronger inbound migration than states with higher taxes and more burdensome tax structures.

There are other similarities: Note that the bottom five states are all big government states with powerful government unions that dominate their political systems.  Tax revenues are their life-blood.  In a word, “blue” states.  Just like New Jersey.

Conversely, the top five states are all smaller government states with weaker government unions.  In a word, “red” states.  They have lower taxes, more vibrant economies, and more hospitable business environments.  It’s small wonder people, businesses, and wealth are flowing to them.

Sadly, our governor is more interested in preserving the special-interest-dominated status quo that got him elected than doing what’s best for the long-term interests of the state.  No doubt, when he leaves office in 2026, Murphy will be off to greener pastures somewhere, but New Jersey citizens will be left holding the bag.