MORRISTOWN, NJ – There are some dark, ugly days ahead for Trenton if the latest state revenue report is a sign of things to come. The legislature can pass rain taxes but they can’t seem to make it rain.
So-called “organic” year-to-date revenue growth (1.3%) fell far short of the number assumed by the N.J. Treasurer’s annual growth plan (7.5%). The anemic revenue increase rises to only 3.0% when the widely-advertised one-shot tax amnesty program’s proceeds are included in the grand total.
More ominously? Gross Income Tax (GIT) is off 6.0% year-over-year after New Jersey experienced a massive 35.2% collapse back in December 2018. This news coincides with record federal revenues following the Trump tax cuts.
“An avalanche of data has emerged that high tax states are experiencing a significant out-migration of high-income taxpayers,” opined Garden State Initiative (GSI) president Regina M. Egea whose organization analyzed the latest data. “The argument that out-migration from high-tax northern states is a result of weather falls flat in the face of data indicating that California, the high tax capital of the West Coast, is facing similar outmigration threats.“
GSI believes a “low SALT diet” is the obvious answer, and New Jersey can’t blame the federal government for its high-SALT obsession.
Repealing the SALT cap would disproportionately help the rich (including Phil Murphy). Since the 10% of taxpayers who didn’t get a net cut from federal tax reform also happen to be relatively wealthy (contrary to Democrat propaganda) and pay 40% of New Jersey’s income tax, New Jersey needs to tackle its worst-in-American property taxes and overall tax climate to prevent more golden geese from flying south (or to Pennsylvania).
In its own analysis, GSI cited the work of the Institute for Taxation and Economic Policy (ITEP) which sorted through the data supplied BY the Murphy Administration in its SALT cap-based lawsuit against the Trump Administration. ITEP observed how “60 percent of the tax benefits – almost $1.9 billion – would go the richest 1.5 percent of state residents, those who make more than $500,000.”
At worst? The SALT cap exposed a long-standing problem notwithstanding New Jersey Democrats’ determination to pass the buck.
The proof that New Jersey can’t blame D.C. for its money problems is readily available: NJ Spotlight recently took a look at IRS data and confirmed that New Jersey was hemorrhaging taxpayers before the SALT cap; New Jersey shed 27,000 households between 2015 and 2016, and these households boasted a total adjusted gross income of $3.5 billion. The decision of one hedge fund titan (David Tepper) to relocate to Florida during this period generated headlines and probably cost New Jersey tens of millions of dollars.
Again, Tepper isn’t an isolated example. The research firm WealthX discovered that the Northern New Jersey/NYC region saw 5,700 high-earning residents – whose “liquid” assets range from $1 million to $30 million – flee the area and take their taxpaying power with them. Further back? Between 2004 and 2008, New Jersey lost $70 billion in just five years from wealth flowing outbound over our bridges and through our tunnels to other states.
The latest poor fiscal news will come to a head in March when Governor Murphy will deliver his FY2020 budget address. He has yet to rule out additional tax hikes.