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Ranks of N.J. wealthy growing, not shrinking, budget officials say

Friday, April 8, 2016   (0 Comments)
Share | 04/06/2016

The ranks of New Jersey wealthy taxpayers are growing, not shrinking, according to the nonpartisan Office of Legislative Services, which was pulled into the fight over the estate tax Wednesday. Income statistics in OLS' budget analysis contradict some claims that New Jersey is losing its wealthiest residents (despite actually losing its wealthiest resident). While Gov. Chris Christie's state budget does not eliminate the estate tax, the fervor surrounding its proposed phase out was prominent in state Senate and Assembly budget committee hearings this week as lawmakers jockeyed for budget data to back them up. New Jersey is one of two states to levy estate and inheritance taxes, and its $675,000 exemption is far below the federal level. Proponents of phasing out the estate tax say it's driving wealthy residents out of New Jersey, while opponents call it a gift to the very rich.

Lawmakers are pushing bills to eliminate the estate tax and raise the exemption on the retirement income tax. The Senate Budget and Appropriations Committee in February approved a bill to eliminate the tax by 2021. Assemblyman Anthony Bucco (R-Morris), who has introduced legislation to match the federal exemption, said Wednesday that "from the numbers I've looked at, is that we have had growth in the lower- to middle-income residents in New Jersey, and not necessarily an expansion in that higher end, that upper end." But studies actually show lower- and moderate-income residents are leaving, while the number of tax returns filed by top income earners is rising, Catherine Brennan, chief of Revenue, Finance and Appropriations at OLS, told Bucco and the Assembly Budget Committee. "That would suggest that New Jersey is generating millionaires and the number of tax returns at the high end is actually increasing," she said. Forty-nine thousand taxpayers with income greater than $500,000 filed tax returns in 2012, the most recent year data was available, compared with about 20,000 in 1997, according to the state's annual Statistics of Income report. The 49,074 tax returns from people with more than $500,000 in income in 2012 was an all-time high, OLS said in its analysis. Meanwhile, tax returns filed by taxpayers with income less than $50,000 fell about 28 percent. Wealthy residents' income, too, was gaining. Taxable gross income from people making over $1 million rose 179 percent from 1997 to 2012, with an annual average increase of about 7 percent per year. Christie's budget includes $849 million in expected revenue from the estate and inheritance taxes next year. The estate tax accounts for about half.

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