More than $70 billion in wealth left New Jersey between 2004 and 2008 as affluent residents moved elsewhere, according to a report released Wednesday that marks a swift reversal of fortune for a state once considered the nation’s wealthiest.While the number of people moving away during that time was only slightly below the number of people moving into the state, the average net worth of those individuals moving away was more than double:
Conducted by the Center on Wealth and Philanthropy at Boston College, the report found wealthy households in New Jersey were leaving for other states — mainly Florida, Pennsylvania and New York — at a faster rate than they were being replaced.
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“The wealth is not being replaced,” said John Havens, who directed the study. “It’s above and beyond the general trend that is affecting the rest of the northeast.”
This was not always the case. The study – the first on interstate wealth migration in the country — noted the state actually saw an influx of $98 billion in the five years preceding 2004. The exodus of wealth, then, local experts and economists concluded, was a reaction to a series of changes in the state’s tax structure — including increases in the income, sales, property and “millionaire” taxes.
“This study makes it crystal clear that New Jersey’s tax policies are resulting in a significant decline in the state’s wealth,” said Dennis Bone, chairman of the New Jersey Chamber of Commerce and president of Verizon New Jersey.
Findings from the report show that about 302,780 households left New Jersey between 2004 and 2008, only slightly lower than the 323,350 households that moved into the state. However, the average net worth of the departing households was about 70 percent higher, at $618,330.That puts the state in an unsustainable economic path and the revenue projections have not taken any of this in to account. Instead, taxes keep rising to maintain a budget level that has been unsustainable for years and it continues to drive people out of the state. Many of those who do come to New Jersey are fleeing the even higher tax burdened states and localities like New York City, although with the rising tax burden in New Jersey, the migration from New York and Connecticut has slowed, and with it the high income taxpayers that the state relies heavily upon to balance its books.
The migration affects the state budget, charitable giving, endowments, and the standard of living throughout the state.
A copy of the full report is here.