New Jersey Taxpayers Deserve Tax Relief

New Jersey has among the highest individual income taxAn individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income. The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment. Though barely 100 years old, individual income taxes are the largest source of tax revenue in the U.S. and property taxA property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services. burdens in the country.

In 1976, then-Governor Brendan Byrne ushered in New Jersey’s individual income taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. to provide residents with property tax relief. But it didn’t work. New Jersey now has among the highest individual income tax and property tax burdens in the country. In recent decades, the state has become synonymous with failed fiscal policies that have led many lifelong residents to leave the state, taking their wealth and investments with them, and making New Jersey a net out-migration state. New Jersey’s upcoming gubernatorial debate offers an excellent forum for the candidates to articulate a vision for greater economic competitiveness. Here are a few ideas the candidates might consider.

We should note at the outset that tax policy is not the sole cause of migration decisions. However, a competitive tax code can help boost the state’s economic prospects, regionally and nationally. In addition to the property and individual income tax burdens, New Jersey taxpayers also face some of the highest corporate tax rates, and aggressive (though improved) treatment of international income. The state also levies an inheritance taxAn inheritance tax is levied upon the value of inherited assets received by a beneficiary after a decedent’s death. Not to be confused with estate taxes, which are paid by the decedent’s estate based on the size of the total estate before assets are distributed, inheritance taxes are paid by the recipient or heir based on the value of the bequest received. . Taken together, New Jersey’s tax code ranks 49^th on our State Tax Competitiveness Index, only ahead of last place New York. Beating the Empire State may bring regional bragging rights, but being second worst in the country is hardly a win for residents.