RegentAtlantic’s 2014 white paper “Exodus on the Parkway: Are Taxes Driving Wealthy Residents Out of New Jersey?” focused on the out-migration of the state’s retirees due to high income, estate, and property taxes. The paper continues to be cited as a seminal source on out-migration research.
Our latest findings indicate that the outmigration trends of wealth individuals continue to accelerate and a new burgeoning trend has joined it – NJ business owners are questioning their futures here in New Jersey. Some have decided to take their family and their business and go. Others have opened additional locations outside of NJ for a variety of cost saving or strategic reasons. We conducted field research, interviewing over 100 small to medium sized business owners to gauge their view of the current economic climate in NJ and their plans for the future.
We share in this paper several business case studies, which are actual situations. We heard very similar comments from the business owners we interviewed and we identified several key themes:
- If the business owners we interviewed could start their companies again, almost half of them 43% said they would likely not domicile their company in New Jersey. A slightly higher 47% of respondents would still base their firms in New Jersey, while 10% were undecided.
- Business owners would seriously consider opening their next business location somewhere other than New Jersey, due to regulatory concerns and the state’s high taxes. Some of their competitors have already been lured to other states by state-sanctioned economic incentives. In the NJBIA 2016 Business Outlook Survey, 62% of business owners indicated that if they are able to expand their business, they will look to do so outside of NJ.
- Even if they keep their companies in New Jersey for the time being, 65% of the business owners we interviewed said they will likely leave the Garden State after retirement to escape high property, income, and estate taxes. Only 24% of our survey respondents said they plan to stay. Another 11% were undecided.
New Jersey’s Business Brain Drain
Our research shows that New Jersey is, indeed, suffering from an entrepreneurial and intellectual brain drain. Business owners tell us they find the state’s increasingly tight regulatory environment and New Jersey’s overall tax burden to be a significant barrier to their success. Business owners’ response: They consider moving their companies.
RegentAtlantic believes this is an issue of great concern to all New Jersey residents — not just business owners. We recognize that small- and medium-sized businesses are the lifeblood of our economy. They create local jobs, attract workers and their families from other parts of the country, improve corporate facilities in New Jersey municipalities, pay taxes, help support local charities, and contribute to both the cultural and social fabric of our communities. When business owners, employees, and their families leave New Jersey, all of our state’s tax-supported organizations — and our vibrant culture — stand to suffer.
Key business factors we’ll discuss:
- From 2004 to 2013, New Jersey added only 3,380 net-new companies.
- Out-migration costs New Jersey serious money.
- Millennials are leaving New Jersey and taking their expensive diplomas and work skills with them.
- New Jersey’s economic recovery is lagging behind the rest of the country.
- New Jersey spends big on business incentive programs but lacks results.
- Charities in New Jersey are suffering just when we need them the most.
Read White Paper here
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