After a relative slowing of net loss of Adjusted Gross Income in New Jersey last year, the latest Internal Revenue Service data shows a net outflow of $3.8 billion in Individual Tax Return Adjusted Gross Income (AGI) for tax year 2020-2021.
That’s $1.5 billion more than the previous tax year and the largest net outflow of AGI recorded since NJBIA began reporting this data.
With this added net loss of AGI, New Jersey’s total net loss is approximately $40.2 billion dating back to data year 2004-2005.
One positive feature of the latest data shows New Jersey’s inflow of more than $11.2 billion was nearly $3 billion more than 2017 through 2019 – a good sign unfortunately outweighed by the state’s simultaneously growing outflow.
AGI is a measure of income that calculates how much total income is taxable. So, its importance is found in the fact that the continued net loss in AGI literally results in less taxable income for the state.
“While there are always different outlooks on New Jersey’s broader population trends, a continuing loss of net AGI remains a critical data point for New Jersey because it hits our state tax revenues and our ability to fund state services and programs,” said NJBIA President and CEO Michele Siekerka.
“Over the years, we’ve seen some of our states in our region and around the nation receive a good portion of New Jersey’s out-migrated AGI – so that also strikes against our competitiveness.”
For 2020-2021, the outflow of U.S. and foreign adjusted gross income was approximately $15 billion, compared to an inflow of $11.2 billion.
New Jersey had experienced a net outflow of $2.3 billion for 2019-2020.
In each of the two previous tax periods (2017-2018 and 2018-2019), New Jersey had a net outflow of approximately $3.1 billion.
“Last year at this time, we were wondering if we were seeing the start of an improvement trend of annual migration data for New Jersey, said NJBIA Director of Economic Policy Research Kyle Sullender. “It was difficult to tell because returns filed in 2020 measured income earned in 2019 – meaning the data likely didn’t capture the effects of the COVID-19 pandemic.
“More than three years after the onset of the pandemic, we are only beginning to understand fully how that crisis impacted existing migration trends and whether those effects were temporary. Unfortunately, we have not yet seen sustained evidence that the flow of income among interstate migrants has changed.”
New Jersey also experienced a positive net AGI total from four states for 2020-2021: New York (+$3.3 billion), Missouri (+$3.8 million), Louisiana (+$2.9 million), and Minnesota ($1.3 million).
The state’s largest net losses were to Florida (-$3.8 billion), North Carolina (-$479.8 million), Texas (-$473.9 million), Pennsylvania (-$367.9 million), and South Carolina ($-358 million).
“There are plenty of reasons why some changes of the pandemic-era may have ultimately benefitted the state’s economy,” Sullender added. “Each new dataset is another piece of the overall puzzle. Hopefully, as we continue to fit the pieces together, the positives will outweigh the negatives.”
