If you were caught in construction traffic on I-78 and I-287 Friday morning, you may have had to walk the extent of the parking lot at The Palace at Somerset Park.That’s because the speakers at the Economic Leadership Forum, hosted by New Jersey Bankers Association, were playing to a packed house.
The speakers, including William Dudley, Federal Reserve Bank of New York vice chairman, spent most of their time looking forward to the coming years, though still finding it difficult to escape the shadow of the 2008 financial crisis.
Michele Siekerka, president of the New Jersey Business & Industry Association, focused on an immediate issue currently affecting the state of New Jersey, despite recent polls showing an optimistic outlook for 2016 among the association’s members.
That looming issue is outward migration and, according to Siekerka, it has a tremendous economic impact on the state.
“In the last decade, this is what we lost in the state of New Jersey: Over 2 million people but, most important, $18 billion net adjusted income (went) out of state,” Siekerka said. “Think about the challenges we have in the general funds of the state of New Jersey (and) the loss of that income means we weren’t able to tax that income.”
This is based on data provided by the Internal Revenue Service covering the last decade.
While the state loses many college age students who leave the state to pursue their education, an issue Siekerka suggested was addressed by the Building Our Future Bond Act of 2012, there’s another phenomenon among retirees that is taking citizens, and tax revenue, from New Jersey.
It’s called, “Six months and a day.”
“If you’re outside the state of New Jersey for six months and a day, you’re not deemed a New Jersey resident,” Siekerka said. “As a result of that, we don’t tax you the way we do New Jersey residents.”
The phenomenon suggests that, where retirees would spend only the dead of winter at second homes in southern states such as Florida, more often this demographic is staying longer to shift residency.
Siekerka suggested this was mainly to escape the state’s high estate tax.
“This has a dramatic impact on all of us, so we know we need dramatic change and it is time now to start taking on some of this systemic change that we need,” she said. “And the way we can do that is sending some very clear signals very quickly about relief on things like estate tax.
“And you’ll hear NJBIA being out ahead of that in the year to come.”