The Wall Street Journal had an excellent editorial today on the out-migration of people and their taxable incomes from high-tax Blue States to low-tax, mostly Red States. The Journal piece echoes the findings of SPCNJ’s recent report “Beware the Downward Spiral: The Economic Consequences of New Jersey’s Special-Interest-Dominated Status Quo.” Taken from Census and IRS data, the Journal’s facts are hard but true.
Over the last decade, New Jersey has lost 5.5% of its population to other states, trailing only Alaska (-8%), New York (-7.2%), Illinois (-6.8%) and Connecticut (-5.6%). More ominously, New Jersey is also among the top states in terms of losing young people.
The Journal makes clear what these states have in common: “Large tax burdens and politically powerful public unions.” That certainly describes New Jersey’s special-interest-dominated status quo.
When people leave a high-tax state, they take their wealth with them. Thus New York, Illinois, Connecticut and New Jersey have also seen the largest outflows of taxable income. In 2018, New Jersey lost approximately $2.8 billion in taxable income, an acceleration from the $2.4 billion that left in 2012. As SPCNJ’s report showed, many of those leaving New Jersey are higher-income earners, which means that the state is losing hundreds of millions of dollars in taxable income that it can ill-afford to lose, given that we have the largest structural budget deficit in the nation. As the Journal notes, this out-migration of people and wealth occurred BEFORE Trump’s tax-deduction caps have been fully felt.
Who is benefiting? Florida, Arizona, Texas, North Carolina, Nevada, Colorado and Washington – all of whom have lower combined taxes than New Jersey. Of note, Florida, Texas, Nevada and Washington have no income tax at all. Notice the pattern?
Yet Governor Murphy continues to do the bidding of the NJEA and its allies by calling for an expanded millionaire’s tax. As the Journal notes, even Governor Cuomo realizes where this leads: “Tax the rich. Tax the rich. Tax the rich. We did that. God forbid, the rich leave.”
The hard facts the Journal presents should be a wake-up call to Governor Murphy: Start looking out for the interests of the people and the future of New Jersey and stop taking special care of his special- interest backers.
Read the full Journal editorial here.