New Jersey's 21st Legislative District

Senator Tom Kean, Jr.

Senator Tom Kean

Editorial: Murphy Must Address Affordability Crisis That’s Driving New Jersey Losses

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The following editorial by Senate Republican Leader Tom Kean on improving New Jersey’s affordability was published by the Star-Ledger on May 2, 2018:

A recent opinion piece by Texas Gov. Greg Abbott encouraged overtaxed New Jerseyans to consider relocating to the Lone Star State.

Abbott was likely emboldened by Gov. Phil Murphy’s budget plan to raise state spending by nearly $3 billion, funded with billions in income, business and sales tax increases on New Jerseyans.

He apparently understands, unlike our governor, that New Jerseyans already shoulder one of the greatest tax burdens in the nation.

He’s probably seen how many of our families, retirees and businesses of all sizes have been worn down by rising costs and convinced to leave New Jersey for other states with lower and more predictable tax bills. Likely sensing Murphy’s overreach, Abbott took the opportunity to highlight the tax benefits of moving to Texas.

A combination of public and private marketing efforts have helped Florida, North Carolina and Pennsylvania — among others — to lure away millions of New Jerseyans in recent years, including many of our prized employers. The sales pitch is almost always the same — those places are more affordable and have lower taxes than New Jersey.

New Jersey is filled with talented entrepreneurs and highly skilled employees from one of the most desirable markets in the world. It’s no surprise then that others would attempt to take advantage of our governor’s extreme tax plans to try to convince more New Jerseyans to move in their direction, with offers of cheaper housing, reasonable taxes and attractive career opportunities for young professionals.

Once they start looking, families and innovators may be surprised to find that income tax rates have remained stable in states as seemingly different as Massachusetts (flat 5.1 percent) and Virginia (top rate of 5.75 percent), regardless of the changing party affiliations of their governors over time. Income tax predictability, at lower rates, has been the key to success in other states.

All of these poaching efforts have had a real impact on New Jersey.

An analysis by the New Jersey Business & Industry Association of census and Internal Revenue Service data from 2004 to 2014 determined that New Jersey lost approximately 2 million residents, 75,000 jobs and $18 billion in adjusted gross income.

The latest IRS data from 2016 showed a net outflow of $3.6 billion in income, equating to a loss of about $100 million in state tax revenues.

Further, a July 2017 report by McKinsey & Company found that middle- and high-skill millennials are the most likely to leave New Jersey, with 85 percent of those leaving in 2015 ranging in age from 18 to 35.

New Jersey businesses are losing talent to other states. New Jersey’s industries are losing the ability to grow because of the lack of skilled human resources. Our state is losing on its investment in higher education, in its families and in its future.

What’s most disconcerting is that our governor doesn’t even appear to recognize that New Jersey is in a competition with other states, much less recognize that it’s focused almost exclusively on taxes, affordability and opportunity.

That’s clear from his response to Abbott in a Dallas Morning News opinion article, in which Murphy discussed his focus on making New Jersey taxes “more fair.”

He doesn’t realize that families and businesses aren’t driven by immeasurable promises of “tax fairness,” but by dollars and cents. People look at their paychecks, bank-account balances and credit-card bills to judge how they’re doing each month. If those metrics are stable or improving, they’re likely to stick around. If they’re sliding in the wrong direction, they’re more likely to consider leaving.

The obvious solution to keep New Jerseyans in the Garden State is to focus on affordability.

With our state budget on track to end the fiscal year with a significant surplus, it shouldn’t be difficult. There’s simply no need for the billions in new taxes the governor has proposed. We should cut state government spending, not increase it. We should shelve Murphy’s expensive plans to create a state bank that would make risky loans at taxpayer expense. We should hold off on his “free” community college proposal that will cost taxpayers hundreds of millions of dollars while doing little to improve college affordability. The list could go on.

New Jersey is a wonderful state with much to offer. Many of the people who feel forced to leave would love to stay. We can make that happen. Hopefully the governor changes course before it’s too late.

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