From the Star Ledger:
New Jersey, consistently one of the most affluent states in the country, has slipped a bit in a new ranking of the rich.
The Garden State fell from second to third in millionaire households per capita, according to a ranking released today by Phoenix Marketing International.
New Jersey lost roughly 10,000 millionaire households, but those affluent families who remain still account for 7 percent of the whole state, the researchers said.
The state had climbed to second last year for the first time since 2010, but was edged out by Connecticut in the 2014 ranking.
A high tax rate for top earners may have led to some migration out of the state, according to David Thompson, the lead researcher.
By losing those 10,000 millionaire households, the Garden State returns to third, where it was ranked from 2010 through 2012. Since the last report, Connecticut lost only 1,000 millionaire households, as it vaulted to the second spot, the group said.
Some groups doubt the millionaire-migration theory. Jon Whiten, a deputy director of New Jersey Policy Perspective, said long-term statistics show that tax rates do not cause the rich to flee.
“If millionaires were truly trying to flee NJ’s top income tax rate, we probably would have lost a lot more when the rates were higher,” Whiten said. “But during the 2000s NJ almost doubled the number of tax filers above $500K at a time when the tax rate was increased on them, twice.”
Last year, a report by the Morristown-based Regent Atlantic wealth management firm released a report entitled “Exodus on the Parkway” that claimed so-called “tax migration” began in 2004, with the state’s passage of the “millionaire’s tax.” The report found that a couple with an income of $650,000 who moved to Pennsylvania would save some $21,000 per year in taxes, adding up to $1.65 million over 25 years, if invested. Most families with incomes of $500,000 per year or more were departing New Jersey for either the Keystone State or Florida, the Regent Atlantic authors added.
“The phenomena is there, that people are leaving – but people in New Jersey have high incomes,” said Joseph Seneca, professor of economics at the Edward Bloustein School of Planning and Public Policy at Rutgers University.
The cause-and-effect is nuanced, Seneca said. Retirement, people seeking better climates, sale of businesses, stock market decreases, and other factors mean that this year’s millionaires might not be next year’s millionaires, he said. But taxes have been shown to be a factor. For instance, Florida has no estate tax, while New Jersey’s is costly, Seneca said.
“New Jersey has been, and remains, a high-income state,” the economist said.