(Bloomberg News) New Jersey's high taxes drive out wealthy residents, slowing the state's recovery, said Charles Steindel, the treasury department's chief economist.
Property, income and estate taxes are the top reasons people leave, said Steindel, who released a study of federal tax data and a survey of financial advisers today at an economic forum in Trenton organized by the treasury department.
Governor Chris Christie, a first-term Republican, has twice vetoed measures sponsored by Democrats that would have raised income taxes on residents earning $1 million or more. Senate President Stephen Sweeney, the state's highest-ranking Democratic lawmaker, said last week his party would push again for passage of a so-called millionaire's tax.
"There is a relationship between state tax rates and where people move," Steindel, a former senior vice president of the Federal Reserve Bank of New York, told reporters. "The higher tax-rate states generally lose more people every year."
Steindel released the results of a survey of subscribers to the state's online newsletter, which includes financial advisers to high-wealth clients. More than half of the respondents said their clients had recently left or expressed interest in leaving, Steindel said.
Three-fourths of those who expressed interest in leaving have annual incomes over $100,000, while 15 percent earn more than $1 million, according to the survey.
Location Decisions
The survey by Christie's administration is at odds with an August study by the Washington-based Center on Budget and Policy Priorities, which found that housing prices and job opportunities have more impact on migration patterns than tax rates. The group advocates more spending on government programs for the poor.
The center's study, conducted by researchers at Stanford University, examined New Jersey's 2004 tax increase on income exceeding $500,000. It found that migration among that group increased at a similar rate as those not subject to the tax.
"For two years we've treated millionaires with kid gloves and it has not worked," Sweeney told reporters Nov. 10 in Trenton. "We're going to fight with this governor when we know he's wrong."