Is New Jersey a Warning to Oregon?...

With Oregon’s voters recently passing two referendums that hiked both the corporate tax and the income tax on the highest earning individuals there, they may just want to look east to see where those policies inevitably lead.

New Jersey is one example.

Not long ago, New Jersey was, by most measures, “the richest state in the nation,” but over the past half decade that state has seen a mass exodus wealth!

Between 2004 and 2008, more than $70 BILLION in wealth has left the state. That’s a complete reversal from the period between 1999 and 2003 when the Garden State saw an influx of $98 BILLION.

What happened?

The tax structure changed in the mid-2000s, when a “millionaires surtax” was placed on “wealthy individuals.” With that surcharge, high income earners are paying 10% of their taxable incomes to the state alone! Coupled with sky-high property taxes and high sales taxes, the state is simply less and less appealing to those who produce the most.

Incredibly enough, this loss of wealth is occurring even as New Jersey adds population. The reason its losing wealth is that those leaving, the most productive and entrepreneurial are worth an average of 70% more than those coming into the state.

As an IBD editorial noted, “This, of course, should be a lesson for lawmakers everywhere: Keep taxes low. If you don’t, the wealthiest among us, who tend to be the most productive, will find more favorable places to put their talents and energy to work.

“Too many lawmakers never seem to understand this. They keep raising taxes to redistribute the wealth and miss the evidence before their eyes: The rich and the productive increase wealth across the full spectrum of an economy...They create jobs. They drive consumer spending. Wealth – not stimulus spending or any other redistributive schemes – begets more wealth.”

Look away at your own peril Oregon. New Jersey's recent fiscal decline would seem to portend the following for Oregon;

1. Oregon will LOSE a significant number of its businesses and attract few, if any to take their place.
2. Oregon will see a significant loss of its "wealthier" people, its "investor class."
3. Revenues from these tax increases will fall far short of projections, leading Oregon's state government to extend the tax increase to lower brackets to make up for the shortfall.
4. Oregon's unemployment rate will rise appreciably.

5. Other Blue States may follow Oregon's misguided lead, as it's always easy to get people to raise taxes on OTHERS.