I keep hearing from Republicans that rich people are fleeing New Jersey because of our high taxes. And I've been curious about the basis of this claim.
It turns out that The New Jersey Chamber of Commerce commissioned a study by the Center on Wealth and Philanthropy at Boston College; that study examined the net wealth of New Jersey from 1998 to 2008. According to the study, between 1998 and 2003, there was a net gain in State wealth of $98 billion; and between 2004 and 2008, there was a net loss of $70 billion.
Chamber of Commerce chairman Dennis Bone says the study shows that higher taxes on high earners are driving high earners out of the State.
I still don't get it
First, I have to point out that this study was commissioned by The New Jersey Chamber of Commerce. Is it really any surprise that the Chamber is interpreting this study as stating that taxes are too high? I'm willing to bet that if the Chamber read my tea leaves, the Chamber would say that the clear meaning is that taxes are too high.
Second, the study looked at wealth, not income. Wealth is the value of assets net of debt at any given time, according to the study. So, when we evaluate the increase in wealth moving to New Jersey from New York during the housing bubble, do we factor in that people were selling their million dollar one-bedroom condos to buy 6 bedroom houses? And when we evaluate the loss of wealth of New Jersey residents during the Great Recession, do we consider that tax laws were not the outcome determinative factor in most financial decisions being made at that time?
The study does acknowledge that some of the migration trends in New Jersey appear to be part of a trend affecting New York and Connecticut, and in some instances the entire Northeast. And the study actually concludes that New Jersey is losing wealth more because of a decline in wealthy families moving in-state than from an increase in wealthy families moving out of state.
So, it seems that the Chamber of Commerce is stretching the truth, to put it mildly, when it says that wealthy households are leaving the State because of our taxes.
Now if we could just get the Democrats to say that the Governor has no clothes when he repeats this specious claim, the citizens of this State might have some hope of an intelligent dialogue on taxes and budgets.