New Jersey faces budget crisis over soak-the-rich policy
New Jersey, like California and a number of other states (do I have to even mention they are dominated by Democrats?) relies heavily on taxes that soak the rich. While feeling virtuous over
redistributing income expropriating wealth and giving it to supporters, they also place themselves at risk. You see, the rich are not like you and me, to quote F. Scott Fitzgerald. They are very, very mobile.
Lindsay Putnam of the New York Post reports:
One man could cause a budget crisis in New Jersey — by moving out of the state.
Billionaire David Tepper has moved from New Jersey to Florida, and the loss of his income tax could leave a $140 million hole.
The 58-year-old founder of the hedge fund Appaloosa Management — who Forbes estimates is worth $11.4 billion — registered to vote in Florida in October, listing a Miami Beach condo as his permanent address, and he filed a court document in December declaring himself a resident of the tax-friendly state.
He also opened a branch of Appaloosa in South Beach, though the headquarters will remain in Short Hills, NJ.
The move could leave a devastating deficit in New Jersey’s income-tax revenue, Bloomberg News reported.
Forty percent of the state’s revenue comes from personal-income tax — a third of which is collected from less than 1 percent of taxpayers. Tepper was New Jersey’s wealthiest resident.
“We may be facing an unusual degree of income-tax forecast risk,” Frank Haines, the budget and finance officer at the state Office of Legislative Services, told a Senate committee in Trenton Tuesday.
He added that even just a 1 percent deduction in income-tax revenue could create a $140 million gap in the state’s budget.
Putnam reports that New Jersey also has an estate tax and an inheritance tax, which is more wealth-repellant. And while the state’s income tax is “only” 8.97% (California’s is 10.75%, last I checked), the state legislature Democrats have tried to equal California’s rate, only to suffer repeated vetoes by Governor Chris Christie.
I see nothing about NJ’s capital gains tax, but California takes a big cut there, something which balloons the state’s tax revenue when the high tech sector creates billionaires.
But California has a benign climate, fantastic scenery, and a lotus eating lifestyle that many affluent people (but fewer and fewer in the middle class) find worth the extra cost. And, many high tech people have to be in California to keep up, and to recruit. But New Jersey has few special claims to keep rich people serving as financial sheep to be sheared. Both states deserve to, and eventually will, run out of rich people to exploit. The blue model is simply unsustainable. Florida, Texas, and other low tax states will continue to grow and accumulate people, wealth, and sophistication, leaving behind bankrupt (financially, intellectually, and morally) states.