The NY Times has a story that says asking people that who more to pay more doesn’t mean they will run away to another state:
Pressured by enormous budget deficits, officials in Illinois, Hawaii, Wisconsin and New Jersey are considering new taxes on the rich. Lawmakers in Albany have discussed several proposals, including increases for those earning more than $250,000.
But even experts who oppose such taxes on other grounds – out of fear that they will retard economic growth and innovation, or encourage lawmakers to indulge in bouts of new spending – concede that there is not much evidence that raising taxes on the wealthy would drive out a significant number.
They cite New Jersey as an example:
New Jersey raised taxes on the wealthy in 2004, increasing by 2.6 percent the tax rate levied on those making more than $500,000 a year; and Gov. Jon S. Corzine this month proposed a new increase on high earners.
But a study by Professor Massey and two colleagues, published in September, estimated that the previous tax increase cost New Jersey only 50 to 350 existing “half-millionaire” households – a relatively small number against the total of 44,000 such households in the state.
While those departures cost the state about $38 million a year in revenue, the study estimates, the higher taxes levied on those who stayed have brought in an average of $895 million a year.
I’m sure this will be one more case where the facts won’t stand in the way of the NJ GOP arguments. With the Governor switching out the property tax deduction for a one year increase in the income tax rate for those making over $500,000, we’re sure to here the mantra shortly.
UPDATE BY CLAMMYC
As someone whose specialty is personal income tax and employment tax, this idea of people either not moving to NJ or leaving the state based on this increased income tax is, frankly, total crap. The top combined NYC/NYS tax rate is still at least 2% higher than the proposed NJ top rate. CT and PA have income tax rates much lower than NJs already. Where are these people going to move to that they wouldn’t already have moved to? And if anyone is going to NOT move to NJ because of a few hundred or even a few thousand dollars in tax, that is absolute nonsense.
Also, if people think that NYS is a destination instead, they are dreaming. In Bergen County, I probably pay higher property taxes than most in the state, and friends of mine who are up to an hour away in NY pay 1.5 – 2 times as much in property tax.
I’d like to see statistical proof of any “flight” from NJ based on a few thousand dollars – even moreso in a down real estate market.