New Jersey demonstrates you can tax the pants off the rich and they won't move

Hilarious.

Charlie Sykes and Patrick McIlheran tout a Princeton University study that finds New Jersey has done a good job of attracting wealthy people ... while Wisconsin manages only to attract lower income folks.

Based on the implicit slams of Wisconsin, one must assume that NJ gives the wealthy -- the most productive members of society, in Sykes' near-fascist terminology -- generous tax breaks.

Only not so much. The Princeton University study was conducted to investigate whether a 2004 tax increase aimed at "half millionaires" reduced the number of that group.

As anyone with access to a map -- and not a right-wing drone -- would suspect, the answer is no.

From the study:

As a result of the new 8.97% New Jersey tax rate on annual income above $500,000, a key issue in the policy debate concerns whether the state’s “half

‐millionaires” are fleeing the state after the imposition of the tax in 2004. In other words, some analysts have suggested that the new bracket makes New Jersey a less desirable residential choice for half‐ millionaires, causing some of them to seek greener tax pastures.

We note that in spite of net out‐migration, the number of half‐millionaires in New Jersey has increased sharply in recent years, from 26,000 in 2002 to 44,000 in 2006 (a 70% increase). Income growth among high earners has led to a tremendous increase in the number of people who fall into the half‐millionaire tax bracket. Using New Jersey tax records, we estimate that the new half‐ millionaire tax rate has generated an average of $895 million per year in tax revenues, rising from $739 million in 2004 to over $1 billion in 2006.

The data suggest that there was an increase in net out‐migration of half‐ millionaire households after the new tax rate went into effect in 2004. However, the effect is small.

One wonders if McIlheran and Sykes read the thing. Because its central finding is a rebuke of the right-wing claim -- endlessly repeated, so it must be true -- that the rich will flee to greener pastures if tax rates are raised.  Where they'd go isn't so clear -- it's but that doesn't matter in Sykesland. (Yes, New Jersey has more leeway in this area than Wisconsin.)

(As to why WI seems to draw lower-income working people  in the time period of the study, the Brawler suspects gentrification in the Minneapolis and Chicago regions pushing people out as one factor. But that's only a guess.)

Charlie and Paddy raise this study because they believe at up to 142,000 decrepit folks -- "the chronically ill, the underinsured, the sporadically employed and the otherwise uninsurable," says Paddy, quoting a Wisconsin Policy Research Institute study -- will pour into Wisconsin to mooch free health care should Healthy Wisconsin become law.

 This is despite the fact that there has been no influx of tens of thousands of scammers to take advantage of Badger Care. Which,under the perfect information model employed by the WPRI study, one would expect. And are the "sporadically employed" really ideal consumers of information about varying levels of health coverage by state? As Seth Zlotocha noted last year when the WPRI warned that Healthy Wisconsin would lead to a chiseler deluge:

Add to that the somewhat obvious fact that health coverage is only one of many factors that could prompt someone to move across state lines, even if they have the economic ability to do so, which is why thousands of uninsured people remain in states with less generous Medicaid programs when they could move to another state and get covered.

Still, don't expect the WPRI to give up on this latest incarnation of the racist "welfare magnet" lie.

Comments

[Publius]

All things being equal, where is the concentration of these "half-millionaires"?

Having once lived there, I can tell you that most of northern NJ residents work in NYC yet commute up to an hour and a half from NJ.

Even with that dumb-ass tax, it is still cheaper to live in NJ. So, really, it is not that NJ is retaining the wealthy so much as NYC is pushing them away.

[Brew City Brawler]

I'm assuming you're right on the first and there's some truth to your second point as well (I'm not sure how much the retain/attract split would work,since some of the people in the study moved on up to the half-millionaire club). But this would have been obvious when the tax was proposed and the critics' argument that it would have driven people away should have been loudly derided. "Where to?" Obviously there's a point at which,yes, tax burdens can become crushing; and soaking the rich for the sake of soaking the rich is questionable. But the standard Charlie Sykes talking point that even the most modest tax increase will drive out the affluent is absurd. This study (and it's not a direct comparison) makes that point.
(Side note: The study also found that in CA, the out migration is driven by the less well off.)