One billionaire at a time, New Jersey’s tax base is slipping away. The Christian Science Monitor reports:
Billionaire David Tepper is moving from New Jersey to Florida this year — and so is his tax contribution to New Jersey, which is so large the move threatens his former home’s state budget.
… New Jersey’s struggling state budget projections rely on income taxes for 40 percent of revenue, Bloomberg reported. To support this, the state levies the third-highest tax burden in the country, with a marginal income tax rate of almost 9 percent for top earners and an array of estate and inheritance taxes.
We keep hearing that raising taxes won’t harm state economies, but surveys show that people in high-tax states are more likely to want to head for the exits than people in low-tax states. Moreover, the superrich are more mobile than other people. It’s possible that places like Silicon Valley, Hollywood and Manhattan have more leeway to raise taxes and still hold on to their plutocrats, but are the Garden State’s amenities so world-class that billionaires will line up to pay more for the privilege of living there?
The answer to struggling states’ woes isn’t to hike taxes, kill jobs and drive taxpayers away, and it isn’t to slash services to the bone, either. The answer is to make government more efficient: to move from 19th century bureaucratic structures to 21st century digital government, to rationalize pensions and to experiment with innovative forms of service delivery that can do for other government offices what charter schools have done in public education—provide a better, more individualized set of services at a lower cost. But this will require bold and creative thinking, and so far neither party has shown itself to be up to the task.