OLS Budget Officer David Rosen told senators today that he has never seen data to back up Republican claims that an additional tax on millionaires has driven high-salaried residents out of the state.
The so-called millionaire’s tax was the subject of several questions asked of Rosen, who said any evidence suggesting millionaires are fleeing the state is anecdotal.
“I have not seen any data that establish that that has in fact occurred,” Rosen said. “It is perfectly reasonable to assume that some individuals would move out of state to take advantage of tax advantages,” but he has not seen data to back up the claim, he said.
That millionaires are leaving the state because of a hostile tax climate is a key argument against the tax that has been proposed by Democratic lawmakers. A tax on residents earning over $400,000 was in effect until early 2010, when the Democratic controlled Legislature allowed it to lapse in the final days of the administration of former Gov. Jon Corzine.
Last year, Democrats proposed a reinstatement of the tax, but the governor vetoed the measure and sponsors were unable to corral enough votes to overturn it.
Rosen pointed to tax numbers from earlier this decade that showed the number of high-income earners actually grew in each year through 2007. In 2008, the number of incomes over $1 million actually declined, but Rosen said that was likely more attributable to the economic crash rather than a tax. Income for high earners fell 16 percent that year, he said, but millionaires still paid 40 percent of the total income tax collected.
Rosen pointed to a Maryland study that showed that while the number of millionaires dropped after the introduction of a high-earners tax, the decline was the result of shrinking incomes and not of people leaving the state.
State Sen. Jeff Van Drew asked Budget Committee Chairman Paul Sarlo if the committee can request a study of New Jersey’s high earners to determine whether there is evidence to back up the claims that the rich continue to flee the state.
Asked how the state underfunded statutory requirements in the budget year after year, OLS Budget officer David Rosen told the senate Budget Committee that the budget law trumps all others.
State budgets over the past decade have repeatedly underfunded statutory requirements such as pension funding, school aid, tax rebates and others. Rosen said while those requirements are required by statute, the budget document overrides those laws.
“The budget law is an extremely powerful document because it suspends everything that isn’t a constitutional requirement,” Rosen said.