New Jersey has lost about $150 million a year in tax collections due to higher state income and property taxes since 2003, according to Dr. Charles Steindel, chief economist for the New Jersey Treasury. That was the year Democratic Gov. Jim McGreevey signed an increase in the state’s highest top marginal tax rate to 8.97 percent, which applies to income over $500,000 a year. Steindel developed two studies that looked at state migration using federal tax data as well as surveying readers of his own newsletter “Tax Notes” in order to come up with the estimate.
Although Steindel admitted that given its many variables, it was hard to read too much information into the outmigration patterns that might be discerned in federal tax data, the clients of the readers he surveyed — who consist primarily of professionals such as financial advisers, accountants and attorneys — said the top three reasons clients expressed a desire to leave the state were income taxes (84.5 percent), local property taxes (77 percent), and estate taxes (67 percent.)
Democratic-leaning New Jersey Policy Perspective objected to Steindel’s message, citing recent nonpartisan studies that it says demonstrate that it’s a “myth” that New Jersey’s taxes on the wealthy are causing them to migrate outside of the Garden State. It cited a study by the Center on Budget and Policy Priorities that said the effect of taxes on migration are, at most, small and that even if a few people move due to high taxes, the overall gain in revenue is significant for the state. The report said that most people moved from state to state due to job opportunities and housing prices.
Steindel’s survey also cited high housing prices (43.7 percent), as well as retirement (47.6 percent) as reasons for people leaving New Jersey.