More Data Showing NJ Is Losing People and Wealth to Other States: Please Take Note, Tom Moran

The Star-Ledger’s Tom Moran has been having a back-and-forth with Sunlight over whether New Jersey has an out-migration problem.  We respect Moran and have found him to be a good-faith interlocutor and we have some data to add to the discussion.

Here’s the argument in a nutshell.  Moran contends that New Jersey’s outmigration problem is a “fantasy.”  He states that our population actually grew from 2010 to 2020, and that the number of millionaires has also grown.  Sunlight counters that it is domestic migration that matters and that New Jersey population has grown due to foreign immigration, which is perfectly fine except that in-migrants to the state only have about 2/3 of the income of out-migrants, so New Jersey is losing wealth – regardless of how many millionaires there are.  (And in any event, New Jersey’s overall population actually declined in 2021).

New IRS data confirms what Sunlight has been saying.  For 2019-20, New Jersey saw a net outmigration of 12,798 taxpayers and $2.35 billion of adjustable gross income (AGI).  For the decade of 2010-2020 (the decade Moran refers to), there was a net outmigration of 200,765 taxpayers and $25.7 billion of AGI.  And remember that a net outflow of $25.7 billion of AGI greatly understates the income New Jersey has lost because it only counts the income from the single year when the outmigrant left the state.  But many if not most outmigrants – especially retirees – leave New Jersey forever.  Their income is lost to the state for many years, even decades, so the actual amount of the outflow of wealth is multiples higher than $25.7 billion.

And in 2019-2020, domestic out-migrants took an average of $107,703 with them, or 9.4% more than the $98,483 domestic in-migrants brought in,  For the 2010-2020 decade, out-migrants took an average of $89,522 versus $81,234 for in-migrants, a 10.2% difference.  It is simply incontrovertible that wealth is leaving New Jersey for other states.  

Now we come to the “why.”  As it happens, a new study  by the Tax Foundation looked at the 25 states that have lowered income tax rates in the last decade and the 4 (blue) states that have raised them – New York, Connecticut, Minnesota and New Jersey.  The facts that stand out are:

1. Rather than resulting in decreased tax collections, tax collections were higher in the states that cut taxes (31.9% higher) than those that raised them (27.8%).
2. And, more relevant to the discussion, tax-cutting states saw 70% more population growth than the tax-raisers, which no doubt helps to account for the increase in tax collections.

Tax rates matter.  The data continues to show that people, businesses and wealth are leaving high-tax states like New Jersey and moving to low-tax states like Texas and Florida.

We hope Tom Moran will take note.