The number of millionaires in the state fell 25 percent from 2008 to 2009, according to data from the state Treasury Department.
That number promises to be the centerpiece of the Republican argument against the so-called millionaire’s tax on the state’s highest earners. From 2009 to 2008, the number of earners with incomes over $1 million dropped from 16,000 to 12,176, a drop Republicans attribute to a hostile tax environment in the state.
During that span, earners with incomes over $1 million paid $2.7 billion in state income taxes, 22.8 percent of the state’s total take of $11.929 billion.
In 2009, the state collected about $500 million less from the state’s top earners, who paid 21.3 percent of the overall total of $10.711 billion.
But the drop in high-income earners coincides directly with the recession that resulted in double-digit unemployment, plummeting housing values and huge reductions in Wall Street bonuses, a major driver of New Jersey wealth.
Republicans concede that one cause for the reduction in high-earners was the collapse of the financial markets, however the party also contends that earners fled the state because of the millionaire’s tax in place at the time.
But Sen. Steve Oroho, (R-24), Sussex said the millionaire’s tax is only one element of the hostile climate the state has created toward business. A study conducted by Boston College shows that in the 1990s New Jersey saw a net influx of capital to the state, but in the 2000s that trend shifted.
“From 2004 through 2008 the state saw a net loss of $70 million in capital,” he said.
Oroho compared the state’s tax climate to a store that continually raises its prices above those of its competitors.
“When you raise prices too high, people stop coming to your store,” he said.
State Sen. Shirley Turner, (D-15), Mercer has introduced a bill reinstating the millionaire’s tax in the Senate as well as a resolution that would put the tax up for a referendum. Turner called the tax return numbers misleading, saying the number of millionaires in the state likely dropped as a result of the recession and not as Republicans claim due to the high-earners tax in place at the time.
“The complaints I get from people in my district are about the property tax, not the income tax,” she said. “It’s the property taxes in this state that are killing people.”
Turner said the millionaire’s tax is about fairness and ensuring that the state’s lower income population is not shouldering more than its share of the burden.
“The Republicans continue to talk about shared sacrifice,” she said. “But it’s not true. You shouldn’t ask those people with the least to pay the most.”
Turner said she introduced the resolution to put the tax on the ballot this November in order to pre-empt the expected veto by the governor.
“We know what happened to the bill the first time around,” she said. “I got the message that it is a dead issue this time also so I’d like to put it on the ballot and let the people decide.”
A recent Rutgers Eagleton poll showed that 72 percent of New Jerseyans favor some sort of tax on the state’s wealthiest residents.
At a Senate budget hearing this morning, OLS budget officer David Rosen said he has never seen data that backs up the claim that millionaires are leaving the state, adding that all evidence to date is anecdotal. Rosen cited the Treasury numbers, saying that while the number of tax filers with incomes in excess of $1 million declined in 2008, it was likely the result of the recession. Rosen said income for the state’s wealthiest residents dropped 16 percent that year.
The budget chief pointed to a Maryland study that concluded that while the number of millionaires in that state shrank after the imposition of a high-earners tax, it was the result of shrinking incomes and not because the wealthy were fleeing the state.