NJBIA's Annual Public Policy Forum - Planning Prosperity REGISTER NOW

From moving van surveys to state polls, results determining the exodus of New Jersey residents always seem to make news – and bring conversations about their legitimacy.

But the one metric that is difficult to dismiss, yet often overlooked, is the outmigration of New Jersey’s money – rather than its people.

And we’ll soon learn whether the Garden State’s alarming trend of net loss of Adjusted Gross Income will continue or reverse course.

The latest Internal Revenue Service (IRS) data shows New Jersey experienced a net outflow of nearly $3.1 billion in Individual Income Tax Return Adjusted Gross Income (AGI) for tax year 2018-2019.

With this added net loss of AGI, New Jersey’s total net loss is approximately $33.2 billion dating back to data year 2004-2005.

Why is this important?

Because AGI is a measure of income that calculates how much total income is taxable. So, the continued net loss in AGI literally results in less taxable income for the state.

“That net AGI loss, whether you’re looking at a decade of it or just the most recent annual data, hits our state tax revenues and our ability to fund state services and programs, and ultimately our ability to provide tax relief to New Jersey’s residents and businesses,” said NJBIA President and CEO Michele Siekerka.

“Over the years, we’ve seen some of our regional states and states around the nation receive a good portion of New Jersey’s out-migrated AGI – so that also strikes against our competitiveness.”

From 2011 to 2019, New Jersey’s average net loss of AGI was nearly $2.8 billion per year.

In each of the past two tax years of available data – 2017-2018 and 2018-2019 – the net loss of AGI was more than $3.1 billion.

“What the data doesn’t necessarily tell us each year is whether these losses in AGI are driven by a smaller number of impactful departures from our state or if it’s more the collective impact of all who leave,” NJBIA Director of Economic Policy Kyle Sullender explained.

Sullender also said that there isn’t necessarily a correlation between population trends and the overall inflow and outflow of income.

“A state can simultaneously experience population growth and a net loss of AGI,” Sullender said. “So, the easiest way to understand what’s happening is that those who are leaving are taking more money with them than what our new residents are bringing in.”

The IRS is expected to release new annual migration pattern data next month, which presumably will provide information for tax data between 2019-2020.

The big curiosity will be what impact the first nine months of the COVID-19 pandemic had on the data for both New Jersey and the nation.

“It’s difficult to anticipate what the impacts of the pandemic will be on these existing trends, if there are any at all,” Sullender said. “A lot of typical movement patterns were uprooted during the pandemic, as people faced health concerns, new employment dynamics, and host of other changes. Did these changes help to attract or deter AGI to the Garden State? It will be interesting to see.”