Three Studies Confirm the Consequences of NJ’s Uncompetitive Business Climate: People, Businesses and Wealth Are Leaving

Last week, we noted that the Tax Foundation ranked New Jersey’s tax climate for businesses as dead last – for the seventh straight year!  We mentioned a natural consequence of this was the outmigration of people, businesses and wealth to states with more attractive business climates.  As it happens, we now have three data points to confirm that statement.

Helpfully, the Tax Foundation compiled a report that incorporates all three sources: the US Census Bureau and the annual United Van Lines (UVL) and U-Haul surveys.  New Jersey did not fare well:

• Census Bureau: The Census Bureau report covered population change from July 2020 to July 2021.  The overall US population grew by 0.1% but New Jersey’s population declined by -0.2%, ranking 39th among the states.  (The data for interstate migration was not yet available, but due to its unfriendly, uncompetitive business climate, it seems highly likely that New Jersey will fare even worse in that metric).
• United Van Lines: Both the UVL and U-Haul studies are not as comprehensive as the Census study and reflect their own commercial data, but they do measure interstate migration patterns for 2021.     As it has for several years running, New Jersey came in dead last:  70.5% of UVL movers were outbound.  Almost a third of these outbound New Jerseyans were retirees, confirming that New Jersey is an unattractive state for retirement.  And retirees take their wealth with them: More than 70% of outbound New Jerseyans had annual incomes over $100,000, and more than half over $150,000.
• U-Haul: New Jersey was 36th out of the 50 states for 2021 (actually an improvement from 48th in 2020 – no doubt reflecting a significant pandemic-related migration from New York City).

Certainly some of the outflow from New Jersey is related to the pandemic – stricter lockdown policies and a desire for less population density – but the Tax Foundation noted that the top third of the states in the Census study had an average state and local tax rate of 3.5%, while the bottom third’s was 7.3%.  Taxes do matter.  A lot.  Especially for retirees.

Likewise, there are some striking similarities in all three studies: California, New York, Illinois and Massachusetts consistently rank at the very bottom, while Florida, Texas, South Carolina and Tennessee consistently rank at the very top.  Cold to warm, yes (except California), but also higher-tax “Blue” to lower-tax “Red.”

In a large and free country like the US, people, businesses and wealth can and will move to more hospitable states, and states are in competition to attract them.  New Jersey is losing that competition.

It doesn’t have to be this way.  New Jersey has many outstanding attributes.  Yet our status quo governor is doing nothing to arrest the outflow, ensuring that future generations of New Jerseyans will reap the bitter consequences.  Does he even care?