The latest figures from the Internal Revenue Service indicate outmigration continues to impact New Jersey’s economy. In 2015, $2.4 billion in net adjusted gross income left the state for a total of $20.7 billion over the last 11 years. Since 1992, New Jersey has lost a total of $31.5 billion in net adjusted gross income.
“Outmigration has continued into 2015 to be a serious problem for the New Jersey economy,” said Michele Siekerka, President and CEO of the New Jersey Business & Industry Association. “New Jersey’s high tax burden and high cost of living continued to drive residents to our neighboring states of New York and Pennsylvania as well as other tax friendly states.
“It is our hope that the new law eliminating the estate tax and increasing the retirement income state tax exclusion will keep taxpayers and businesses in New Jersey. This is the first step in comprehensive tax reform that we believe will go a long way toward making New Jersey more affordable,” Siekerka said.
Earlier this year, NJBIA released a report identifying outmigration of income as a significant issue for the state’s economy. At the time, research found that the state lost $18 billion over the last decade in net adjusted gross income.
During that same period, New Jersey lost $11.4 billion in economic output; $8.4 billion in household spending; 75,000 jobs; and $4 billion in total lost labor income.
“Our research shows that if just 20 percent of those ages 45 and older stayed in New Jersey in 2013-14, it would have resulted in a half a billion dollars in additional adjusted gross income staying in the state and flowing through the economy, along with over 2,000 jobs and $300 million in economic activity,” Siekerka said.
Before the recent tax reform bills were signed, New Jersey was one of only two states with both an estate and inheritance tax, and the current estate tax threshold of $675,000 made New Jersey’s the lowest threshold in the nation. In addition, the very low retirement tax exclusion made New Jersey uncompetitive with our border states. Sending the clear message now that the estate tax will be totally eliminated in January of 2018 and that the exclusions for retirees will be significantly increased tells New Jersey residents that Trenton is finally listening and willing to take steps to keep our residents here.
“When our residents remain, so does their income, which will flow through the New Jersey economy creating jobs, economic activity, and government revenue,” Siekerka said.