High Taxes Mark Exit Fare for New Jersey Residents
Posted October 15, 2007
It’s no secret that the cost of living in New Jersey is high, very high. But a new report by the Edward J. Bloustein School of Planning and Public Policy at Rutgers University has shown that the fee New Jersey is paying for its high price tag is people – and lots of them.
According to the study, authored by James W. Hughes, Joseph J. Seneca, and Will Irving, in 2006, New Jersey experienced an overall population loss of 72,547. This signals a continuing trend in a “sharp acceleration” of people leaving the state. In fact, between 2002 and 2006, New Jersey saw a net migration loss – defined as “the difference between the number of people moving out of New Jersey to the rest of the country and the number of people from the rest of the country moving into New Jersey” – of 231,565 people. And, as the study notes, “the population losses are starting to have significant economic and fiscal consequences.”
In 2001, New Jersey’s “direct loss of aggregate adjusted gross income” was $689 million. By 2005, that number had skyrocketed to $1.96 billion. Over the period covering 2001 to 2005, the state saw an adjusted gross income loss of $7.9 billion. With the 2006 numbers included, this cumulative total is estimated to reach $10 billion.
In addition to providing the direct numbers, the study also paints a picture of the “what ifs.” What if New Jersey had not lost $7.9 billion? What if residents had remained in the state and continued to use their spending power here? What if the state’s economy had benefited from this revenue?
According to the report, if the state had not lost the $7.9 billion, “the yield of New Jersey’s Gross Income Tax in 2005 would have been $236 million higher,” and the revenue from New Jersey Sales and Use Tax for the same year would have been $217.5 million more. Additionally, the nearly $8 billion loss “and the related reduction in consumer expenditures from the additional income and jobs that would have existed if the income was retained … resulted in lower employment” to the tune of 38,810 jobs.
While these numbers alone fall short of “staggering” when placed against the backdrop of the state’s total economic picture, the worrisome factor, as the study notes, is that the loses are permanent and will continue barring a reversal of the net migration loss trend.
What can bring about such a reversal? While the study indicates that “[t]here is no definitive evidence as to the causes” of the state’s population flight, “improved relative economic opportunity elsewhere, New Jersey’s high housing costs, and its high overall cost of living are possible explanations.” According to a recent Daily Record article, this high cost of living for a homeowner includes “a tax bill in the area of $8,000 or $10,000 a year in addition to a mortgage.”
Governor Jon Corzine admitted the culpability of the state’s expensive price tag in stating, “I don’t doubt that the overall tax burden of the state makes other places look more attractive when people have options.” Yet, despite this concession, New Jersey legislators have yet to enact real tax relief in the forms of meaningful property tax reform. And last year, Governor Corzine himself put his signed endorsement on a hike in the state sales tax.
The Rutgers report should serve as a wake up call for our legislators. New Jersey taxpayers are tired of footing the bill for government spending. Either our legislators will heed the message and implement real reform coupled with true fiscal restraint, or New Jersey’s residents and families will continue to follow the one-way road that is the state’s final exit ramp.
As Jim Gearhart, popular morning host of New Jersey 101.5 FM radio, keeps stating, with the mass exodus growing, “would the last person out shut off the lights?”
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