Voting With Their Feet: A Million People and $91 Billion of Income Have Fled NJ For Other States

We’ll start the new year with a look back at just how serious New Jersey’s outmigration problem has been, which portends a bleak future for our state.  Thanks to Edward Pinto’s research* in Newsweek, we learned that over the span of three decades (1990-2021) New Jersey has experienced the 4th-worst domestic outmigration of people and wealth in the nation.  There is no greater reflection of New Jersey’s calcified, special-interest-dominated political status quo than people voting with their feet.  When people don’t like the status quo and do not believe they can change it, they leave.

Here are the grim totals: a net 1,063,609 citizens have left New Jersey for other states, taking a jaw-dropping $91.3 billion** of taxable income with them.  Unsurprisingly, 552,172 have left for Florida, with its appealing 0% income tax rate drawing wealthy New Jersey retirees who averaged $157,984 in taxable income. North Carolina, Pennsylvania, Georgia, and Texas round out the top five destinations.

As Sunlight has emphasized, the $91.3 billion greatly understates the loss in wealth because it represents the annual gross income of the departing citizens for only the single year they left New Jersey.  But these citizens — especially if they are retirees — have likely left New Jersey for good, so their taxable income is lost for every year they reside outside of New Jersey.  For wealthy retirees, that can be 20 years or more.   In any event, the total loss to New Jersey is many multiples of the $91.3 billion figure.

Here are the bottom-five losers:

• California: -4,642,390 citizens and -$232.8 billion in taxable income
• New York: -4,640,487 and -$304.9 billion
• Illinois: -2,017,255 and -$153.7 billion
• New Jersey: -1,063,609 and -$91.3 billion
• Massachusetts: -817,774 and -$51.1 billion

Here are the top-five gainers:

• Florida: 3,720,156 citizens and $458.2 billion in taxable income
• Texas: 2,665,540 and $123.5 billion
• North Carolina: 1,564,451 and $93.4 billion
• Georgia: 1,299,149 and $43.3 billion
• Tennessee: 904,021 and $47.0 billion

Notice a pattern?  All the biggest losers are states with big government, powerful government unions (with out-of-control government pensions), and the high taxes to pay for them.  In a word, “blue” states.  All the biggest gainers are smaller government states, with weaker government unions, and the lower taxes to pay for them.  Of course, Florida, Texas, and Tennessee have no state income tax at all.  All of these are “red” states.

We recognize that there is a certain amount of outmigration that inevitably comes from retirees heading south to warmer climes, but that does not mean that nothing can be done to reduce outmigration.  That’s why New Jersey recently enacted property tax rebates for seniors.  That law recognizes the negative impact of taxes and cost of living, as did Sunlight’s most recent report, which highlighted how New Jersey teacher real salaries — while nominally higher —  are actually lower than Georgia and Texas.

Losing a million citizens and hundreds of billions in income to other states is not a healthy sign and portends a more difficult future for the state and its citizens.  Can new Jersey’s political status quo be changed before it’s too late?

*Data from the American Enterprise Institute’s Housing Center‘s analysis of IRS filings.

**Gross income figures for 1992-2021 in 2021 dollars.