N.J. on losing end of population shift

People moving out of New Jersey between 2004 and 2008 drained the state of $70 billion in wealth and $2 billion in potential charitable giving, a new study says.

The loss was a turnaround from the previous five-year period, when migration to the state, particularly by wealthy households, brought in $98 billion, according to a study produced by Boston College's Center on Wealth and Philanthropy.

Business leaders say the shift was prompted by increased taxes on the wealthy and an unfriendly environment for small-business owners.

Dennis Bone, chairman of the New Jersey Chamber of Commerce, which funded the study along with the Community Foundation of New Jersey, called the results "alarming," though not surprising.

For years, said Bone, who also is president of Verizon New Jersey, he has heard from financial advisers who say they encourage their wealthy clients to establish residency in other states.

"You can't lose $70 billion in wealth over a few years and not want to say, 'What's the impact of this on the state of New Jersey and going forward?' " he said.

Bone said tax increases on the wealthy that passed in 2004 hurt the state. People earning $400,000 and up saw further increases in 2009. Those making more than $1 million were taxed at 10.75 percent.

In a morning budget hearing yesterday, Senate Majority Leader Barbara Buono (D., Middlesex) said the money raised by the tax on the wealthy, if it had been renewed, could have offset $300 million in school-aid cuts proposed by Gov. Jon S. Corzine before he left office, and provided more money for the next budget.

Spokesman Mike Drewniak said Gov. Christie would veto any attempt to renew those increases. He said the wealthy have the means to leave the state, but the middle class may not.

"They're stuck here with our exorbitant property taxes and the historical government spending," Drewniak said.

The study tracked the net value of household assets instead of income, because that more closely correlates to charitable giving.

Hans Dekker, president of the Community Foundation, said a $2 billion loss in charitable giving is significant.

"It's like having a 3 or 4 percent leak in the boat," he said. "It's the steady leak that concerns us."

Dekker would like to see a reevaluation of the state's lack of a tax deduction for charitable giving.

While the entire Northeast has seen an outmigration of millionaires, New Jersey has seen a disproportionate amount, with fewer moving in to replace them, the study said. The people arriving are younger and less educated than those moving out.

The number of wealthy households moving to New Jersey from Pennsylvania between 2004 and 2008 dropped 45 percent. From New York, the number dropped by half.