Nobody ever felt sorry for a millionaire. At least that’s the principle some Democrats in Trenton are banking on as they resurrect former Gov. Jon Corzine’s “millionaires tax” to close the expected budget gap for fiscal 2015. Proponents of this tax increase promise it will hit only the wealthy, but in fact, poor and middle-class families will ultimately shoulder the burden.
Of course, the term “millionaires tax” is a misnomer. New Jersey already taxes the income of millionaires at one of the highest rates in the nation — higher than 44 other states do. The so-called millionaires tax is just an expired tax increase that raises New Jersey’s top tax rate to about 11 percent, the third-highest in the United States.
Proponents of the millionaires tax imagine that the only reason people could oppose this tax hike is that they’re worried New Jersey’s well-to-do will run low on caviar if it’s passed.
Actually, what we’re worried about is the impact on New Jersey’s working families.
As it turns out, millionaires don’t like paying high taxes any more than the rest of us do. But unlike most of us, they can easily move out of New Jersey to avoid new tax hikes. For many, changing their tax residence is as simple as spending a few more weeks a year at their vacation home in Florida. They can keep a house in New Jersey to spend time with the grandkids, live for six months and one day in the Florida home, and voilà, they are Florida residents who no longer owe a dime in New Jersey taxes. As a bonus, their children will escape paying New Jersey’s highest-in-the-nation estate tax.
It’s little wonder that in 2010, the last year we had the old Corzine millionaires tax on the books, 88,000 individuals left New Jersey, taking with them a total annual income of $5.5 billion.
The millionaires tax could be more aptly named the “Goodbye New Jersey Tax.”
Remarkably, just 50 high-earning individuals in New Jersey pay 5 percent of the entire state income tax bill. That means the exit of just two or three top-earners can cost the state tens of millions of dollars in lost tax revenue. Those losses result in cuts to services for the poor or tax increases elsewhere. In short, the millionaires tax proposal suffers from a math problem: The numbers don’t add up.
Now Democrats in the Statehouse imagine that when millionaires leave, they take only their Lamborghinis with them. In fact, many of them take their businesses too.
A quarter of a million small business owners pay taxes on their income as individuals in our state. Many of them will be hit by the millionaires tax. The original millionaires tax kicked in at incomes of $500,000 — roughly the annual income of a small construction business. In New Jersey, small businesses employ about 1.6 million workers, and these workers are at risk of losing their jobs as operations move south to escape a mounting tax burden.
That’s why the Goodbye New Jersey Tax is a great job creation program — for Florida.
Don’t shed a tear for the rich as they head off to spend a few extra weeks at their vacation homes. They’ll be fine. But poor and middle-class New Jerseyans will be worse off, in terms of both job opportunities and access to public services funded by tax dollars once paid by the wealthy.
Even Democrats in other “deep blue” states have recognized that now is no time for tax hikes. New York Gov. Andrew Cuomo is actually trying to cut taxes on high-earning New Yorkers. As he puts it: “We’re trying to attract business. We’re trying to keep business here.”
Maryland and Massachusetts now tax millionaires’ income at roughly 5 percent; in Pennsylvania, it’s 3 percent. Meanwhile back in Trenton, Democrats threaten job creators with an 11 percent tax rate.
As our nation is still in the grips of a weak recovery, we should be working to attract job creators and capital to our great state — not to drive them away.
- Senator Joe Kyrillos (R-Monmouth)