Taxes driving people out of Jersey
Published on 30 Jul 2006 at 9:51 pm.
17 Comments.
Filed under Local.
Star-Ledger Staff
Some see it as an exodus. Others call it a mass migration. But it’s really a financial flight.
In interviews with dozens of New Jersey residents, financial advisers and estate planning attorneys, one thing becomes apparent: People are being taxed out of New Jersey.
“I’ve always felt there’s a level of taxation where people say, ‘Enough is enough,’” said Curtis Dubay, an economist with the Tax Foundation, a Washington, D.C., nonpartisan tax research group. “If any state has pushed the line, it’s New Jersey.”
According to the foundation’s 2006 State Business Tax Climate Index, New Jersey has the third highest tax load in the nation. For 2007, it’s probably going to be worse, Dubay said.
“I have little doubt that New Jersey will be the worst ranked state with regard to taxes,” he said.
There’s no question people are leaving. And, they have been for some time. Internal Revenue Service data shows each of New Jersey’s 21 counties suffered a net population loss in 2004, the most recent year data is available. In that year, nearly 100,000 households left the state, taking with them $1 billion in personal income.
They’re leaving for more tax-friendly states such as Florida, Nevada and Delaware, IRS data shows. Here are the stories of five families of different financial means who have either left, or might leave, New Jersey:
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THE COST OF LIVING
Former Princeton residents Don and Dawna Gallo now call Golden, Colo., their home.
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“We loved New Jersey and we had no intention of leaving,” said Dan Gallo, 45. “We wanted to stay and retire in the state, but when we looked at the costs of remaining in New Jersey, leaving was economically the right thing to do.”
The Gallos say taxes — of all kinds — were a huge reason for their move.
Having done stints in New York, Connecticut, Massachusetts and Vermont, they chose to make New Jersey their home. In 1997, they built a 4,300-square-foot contemporary on five wooded acres in Princeton, with four bedrooms, three baths and property taxes of $12,000 a year. One of the reasons the Gallos chose Princeton over neighboring communities was because they thought property taxes would grow at a slower rate than in other towns. Not so, they learned over time, as they watched their tax bill soar to $27,000 by the time they sold in 2004.
Income taxes were also bothering Don Gallo, who owned his own management consulting business. While revenues from the business were in the $750,000 a year range, Gallo says he was only taking home 50 cents on the dollar after paying income taxes.
A combination of the high property taxes and high income taxes meant the couple was subject to the Alternative Minimum Tax for their last several years in the state. The 2004 addition of the so-called “millionaire’s tax,” the new state income tax rate of 8.97 percent for taxpayers with taxable incomes greater than $500,000, was the final straw for the couple.
The Gallos started to examine the cost of living in other states. The potential savings was staggering, Gallo said.
“The direct tax savings per year is $80,000 a year, and that’s real money. Weigh that across 10 years, and that’s the difference between retiring at 55 or 65,” he said.
Gallo said many of the friends he left behind in New Jersey are waiting for their children to grow up and move out on their own. Then, many plan to leave the state for more tax-friendly domiciles.
The Gallos’ Colorado home is similar in size to their Princeton one, but on 35 acres, with property taxes of $3,500.
“It’s the total quality of life and the overall cost of living,” said Gallo. “It’s a big change from New Jersey.”
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RETIRING IN NEW JERSEY
Douglas and Jacquelynne Adams live in the Mullica Hill section of Harrison Township, but they’re afraid they won’t be able to stay when Douglas retires in the next few years.
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The Gloucester County community hasn’t reassessed property taxes since 1991, and talk of the town is that it’s long overdue. The Adams’ 3.9-acre, four-bedroom home would sell for about $525,000 today, with annual property taxes of more than $11,000 (up from $6,700 when they moved in five years ago). But the home’s assessment is only about $250,000, so they expect a huge hike when the tax assessor calls.
“We live in mortal fear because we know they’re going to reassess sometime soon,” said Jacquelynne Adams, 66, a piano teacher and musician. “We’re overdue, and if they assess us for even $500,000, we’ll be paying $22,000 in property taxes. We’d love to stay, but that’s a big chunk, especially when you’re retired.”
The couple say they’re paying nearly $1,000 a month in property taxes today, and they’re afraid even if they pay off their mortgage before they retire, there’s no cap to how high the property taxes could go.
A big boost would derail their retirement budget.
Douglas Adams, 58, earns a six-figure salary, but once he leaves his job and the income stops coming, he’s concerned that their $900,000 investment portfolio won’t offer enough income to pay the tax bill and their regular living expenses, which are far from extravagant.
If the tax situation were better, they say they’d stay.
“There are two good things about New Jersey. It’s midway between all the kids, and they pump your gas. We’ve been here long enough to get connected,” said Douglas Adams.
They say they love their community and their friends. Jacquelynne is very involved with her church, where she plays piano, and she teaches local kids. But their three grown sons and their grandchildren no longer live in New Jersey. So they’ve started looking at real estate in Delaware, which would keep them close enough to their kids’ families. Property taxes for homes they’re considering range from $2,400 to $3,500 a year.
“I want him to retire soon,” Jacquelynne said. “I’m older than he is and I want to be able to walk around and hold hands and go places with him, so …”
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THE INCOME TAX SQUEEZE
Former residents Jean and George Taber had a big stake in New Jersey. Not only was the state their home, it was also home to their business.
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The Tabers are the founders of Snowden Publications, the parent company of NJBIZ, a weekly publication that covers business in New Jersey. In 2005, the Tabers sold the business to Journal Publications for an undisclosed sum.
George Taber said they were hit hard with income taxes after the sale.
“When you sell a company in New Jersey, all of your income is concentrated in a short period of time,” George Taber said. “As far as the tax authorities were concerned, we were millionaires. I was only a millionaire one year in my life, and that was the year we sold the company.”
Taber, 64, wouldn’t discuss exactly how much they got for the business or how much they paid in income taxes that year, but they were subject to the 8.97 percent state income tax on incomes over $500,000.
As someone who followed the New Jersey economy for a living, Taber always knew taxes would be high when he sold the business. Years before he sold, he considered relocating both his home and his business to a more tax-friendly state. But with NJBIZ being a business publication about New Jersey, he felt it belonged in New Jersey.
“I was concerned that New Jersey wasn’t dealing with its tax problems,” he said. “Looking down the road, I was convinced you’d have a series of crises and, in one way or another, taxes would be going up and up and up, and I wanted to get away from that atmosphere.”
Now, the business history, the couple lives in Block Island, R.I. His friends joke that the Tabers moved from one high tax state to another, but George Taber doesn’t agree. He says New Jersey’s tax system is broken with no sign of repair. In Rhode Island, the state’s taxes are based on the federal system, so Taber says there’s at least something of a regulator to keep the system under control, he said.
“In New Jersey, I didn’t want to see more of my fixed income going to taxation. It was a bread-and-butter issue,” he said.
The move to Rhode Island is also saving the Tabers thousands of dollars a year in property taxes. Their Princeton home had taxes of $16,000 when they left. Their Rhode Island home, while double the size of their New Jersey one, only has taxes of $2,500 a year.
“When you retire and you’re looking out on the rest of your life, and you have to live on the nest egg you’ve been able to build after working a lifetime, paying $14,000 less in property taxes, that’s going to be worth a lot of money,” Taber said.
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QUALITY OF LIFE
Ted Amendola says his family is living a better life because they’ve left New Jersey.
QUALITY OF LIFE
Ted Amendola says his family is living a better life because they’ve left New Jersey.
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“I came out here to take my son to school at Arizona State and I said, ‘This is where I want to retire and spend most of my life,’” Amendola said.
He’s talking about Scottsdale, Ariz., a long way from his old digs in Glen Rock.
Amendola spent much of his life in New Jersey. Born in Brooklyn, he followed his parents, who were New Jersey natives, to Fair Lawn after graduating college. He took a job teaching at Teaneck High School, where he stayed until he took early retirement in 1997. By then, he was divorced and remarried, and he and his new wife Jodi fell in love with Arizona.
“We came out in 1995 for a visit and we ended up buying a house even through I had two years before I could take early retirement,” Amendola said.
Their Scottsdale home, which they rented to tenants before making a permanent move, costs a mere $4,000 in property taxes for five bedrooms and 4,000 square feet, with a guard-gated community, swimming pool, tennis courts and other amenities. Compare that to the $8,000 in property taxes Amendola was paying in Glen Rock for what he calls a modest, three-bedroom, 2,500-square-foot home.
“We wanted to live in a nice house with nice surroundings, but in Bergen County, it’s really expensive to live and to get a nice house on a teacher’s salary,” he said. “When we went out here and saw what we could get for the money, it was a no-brainer.”
Amendola says the first thing they noticed after moving was that the overall cost of living was cheaper, from gasoline to groceries to the price of a movie ticket. That may sound like small change, but he says when you add up the difference in expenses, they’re saving a significant amount of money.
Not to mention sunny weather all year round, of which the outdoors-loving couple and their 5-year-old daughter Jackie take full advantage. Plus, the fatter bank account.
“Overall, it’s the property taxes. We’re adding that to savings,” he said.
AN OLD PROBLEM
If you think sky-high property taxes are a new headache, consider the story Bill and Lorraine Johnson tell. They left New Jersey 18 years ago and their property taxes are still less than they were back then in the Garden State.
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The Johnsons were born and bred in New Jersey. Bill Johnson, a Kearny native, and Lorraine, from Irvington, decided to raise their family in Succasunna.
Now, with four grown sons, the couple lives in Bethlehem Township, Pa. Back in 1988, the couple read the writing on the proverbial tax wall.
“We always lived in New Jersey. Our four-bedroom colonial on one acre in Succasunna had property taxes of close to $6,000, which was a lot, and we were also getting hit with high car insurance,” said Bill Johnson, 63.
Then one day, he saw an advertisement for a new housing development about 30 minutes away, across the Delaware, and he and Lorraine, 62, started their research. They purchased a similar home to the one they owned in New Jersey, and the property taxes were only $2,500.
“It’s about $4,200 today, but the increase has been relatively insignificant considering the time, almost 20 years, and our value has doubled,” he said.
Bill was still working, and he kept his same job despite the move. He says the additional commuting costs for his now 50-minute ride were minuscule compared to what they were saving in property taxes and other expenses.
“Even the quality of life, the food was cheaper here, so that category in the budget dropped too,” he said. “We’re better off.”
While his neighborhood is getting more crowded these days, he says it’s still not like New Jersey.
“Our real estate agent says 80 percent of the people he sells to are from New Jersey,” he said. “They’re cashing in on equity and they’re willing to commute.” Calculate your tax trauma here
17 Comments to ‘Taxes driving people out of Jersey’:
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nEoCLONE on 30 Jul 2006 at 10:35 pm: 1
If you can not afford to share your wealth with the undocumented workers, then you should leave. The property taxes are not bad in New Jersey, especially when you don’t own a home. The elitist pigs who complain about high taxes should just rent out some rooms to poor undocumented people. You should also feed and provide clothing to them.
The people who pay taxes need to understand the plight of the undocumented. Do not try to pass any referendums to spare your own family high tax bills. Since you won’t let the undocumented vote, you will brutalize them with tax reform. They will lose out on free education, welfare, free healthcare and all the other things you suckers, I mean documented, pay for. I think you are just zenophobic in wanting the undocumented to live within the law and give up all the good free stuff you pay for. Well, I will be gathering my thoughts about how evil you all are for wanting low taxes and laws upheld. Once my doctoral thesis is complete, I will grace you with it. Then off to law school.
Ex-Pat Jersey on 31 Jul 2006 at 4:01 pm: 2
I left NJ 19 years ago when I became a college student. I’ve never looked back. Not only are the taxes oppressive but the politics are insufferable. I’m glad my children won’t be exposed to to it.
Ex-Pat Jersey on 31 Jul 2006 at 4:17 pm: 3
nEoClone is exactly right. Take all the money you work for and set up a booth on the corner and award it to all the undocumented workers, their families, and their pets in the State. This will assist you in freeing yourself from the guilt you must feel over actually doing better in life than someone else.
Not only will you feel better, but the undocumented workers [et al] will feel better as well. Once we all feel better, New Jersey will become a beacon of good will that will surely spread the globe over.
Ah, I can see it now, the end to all suffering and injustice can begin if we in NJ all just pay more than our fair share of taxes. Also, nEoClone is the person who should decide for all of us what is a fair or unfair amount. Imagine, someone wanting to move out of the State without nEoClone’s approval??!! Shocking, just shocking.
An Immigration Victory on 31 Jul 2006 at 4:45 pm: 4
Thank God its a Clone and defective at best.
The meek NJ voter on 31 Jul 2006 at 6:47 pm: 5
I would grade this tirade about a C minus for style and tongue-in-cheek satire. The alleged author should study up on Henry L. Mencken’s mid-career work in the 1920’s for more incisive wit that doesn’t quite cut muster here.
nEoCLONE on 31 Jul 2006 at 10:29 pm: 6
One must actually be familiar with the postings of nEo to fully appreciate the sarcasm. It was meant to lighten things up by showing just how foolish the left’s position is. I am assuming that the meek voter has a long list of published works and quite possibly a sitcom or 2. It was an opportunity to illustrate the absurdity of nEo and his pandering to illegal aliens that destroy our country. King Corzine is going the Florio-McGreevey route. I do not mean raise taxes and stick it up, well, you know. It is raise taxes and be ethically bankrupt.
nEo on 31 Jul 2006 at 10:45 pm: 7
It is easy to blame others for our own problems. Undocumented workers suffer the same plight- they also pay taxes. To blame them, Clone, is to approve of the current situation which I think is in need of drastic measures. You want to save more than 13% on your property taxes, forget undocumented workers and abolish County Governments. They are redundant creatures- extensions of the state and they should be performing as a judicial extension of the state- nothing more. Exxes Count alone spends more than 700 millions- Somerset County is in the same tier.
There are other measures, but talking to you is like talking into a brick wall- because your problem is not taxes, your problems is bias against undocumented workers- superficially that is.
nEo
nEoCLONE on 31 Jul 2006 at 11:11 pm: 8
This is exactly the point. You are a babbling bag of wind. You only care about ILLEGAL ALIENS. You do not care about those footing the bill. ILLEGAL ALIENS DO NOT PAY PROPERTY TAXES. The discussion is PROPERTY TAXES. You are again exposed. It is a comedy show with you. There is no bias here, only facts.
nEo on 1 Aug 2006 at 6:57 am: 9
Hey you defective clone:
You are using my views to score points against the left. Well, I am sure the ?left? used me in the past to score points against the ?right?. Obviously, you are not familiar with my postings, because even though I am pro immigrant?s rights, I don?t ascribe to the ?left? or ?right?. I am independent.
But stop talking about me, lets talk about your discussion- you are blaming 22 million people for the problems you and the rest of the nation is facing. Now, if that is not pandering and fear mongering, I do not know what is. Its like being taken back to the years of slavery- you are old enough, you should remember how African Americans and other minorities were blamed for all evils of the world. But I will not chastise you for that, it is the nature of the majority.
The truth is that undocumented immigrant, 22 million of them, are not to blame for expensive gas. We are paying an average of $3.00 per gallon, and BIG OIL is reporting billions ? the largest in history ? in profits. If that is not robbery, I do not know what is. By the way- Republicans are to blame for that. They are ready to give Big Oil even more.
As if that was not enough, Republicans in congress insist in giving millions in tax cuts to the wealthiest 8000 families in America.
Add to that the war in Iraq, how much is that now 324 Billions? Our entire educational system could have been subsidized with that amount. Thanks to you fellow Republicans.
The list is endless, but it is obvious who is to be blamed.
Stop the fear mongering, because you and all of your ancestry were once immigrants and if yo ask the rightful owners of this lands, you too came here illegally. As far as I see it, we are all immigrants here since 1492 and will continue to be. This is a nation of immigrants. We ? including you - are its strength. With population decline in all groups here in the United States, including Hispanics living here, immigrants are a key component of our economy and will continue to be.
Yes, there are problems of adjustment, but is a matter of time before undocumented immigrants adjust to the way of life here and you ? actually those after you - adjust to what they contribute culturally and economically; though I think they already have, 85% of homeowners use undocumented labor to be able to afford repairs to their homes. In one generation, the difference will not be seen. Undocumented immigrants, if you can tell them apart from the documented, will be part of the landscape as you are now.
Which brings me to my final point, how can you tell when someone is undocumented or documented. I am sure you know me; what do you think I am, documented or undocumented? Is a 50/50 chance, but I am sure you will get it wrong. You know why, because it is obvious that those who claim to be against and blame everything on undocumented workers are not doing so because they are a legitimate source of worry- there is another underlying issue in those who think like you that I can speculate about, but cannot describe fully. There is no way to tell who is and who?s undocumented unless you have the federal authority to ask for paper. Blaming them within your limited thinking, suggests you are guessing and driven by another deeper underlying reason to do it.
Once I will forward an invitation to the place, I do volunteer work so you can see first hand the importance of undocumented immigrants.
nEo
nEo on 1 Aug 2006 at 8:51 am: 10
Clone
Wait- I do care about property taxes, in fact it has been an issue for years. What I am trying to tell you is that undocumented workers have nothing to do with property taxes. Again, they also pay it. Everyone living here has to pay rent- unless you are filthy rich and dont owe anything to anyone. So, undocumented people do pay property taxes through rent. Without renters, tenants could not afford to pay their mortgage and property tax expenses. So this idea that they do not pay taxes is wrong.
Blaming, especially when you are blaming the wrong aspect of the property tax issue, is not going to help your argument. If you want to discuss property tax, lets do that, but leave the blaming behind.
The problem is that the cost of education keeps going up and the education is not reflecting the increase. Property taxes are easy, they are the easiest tax to collect and manage- it is visible and impossible to evade. This makes it a target of choice to fund everything under the sky. Then there is this judicial idea that throwing money at education produces better students. Then there are these federal and unfunded mandates, which wants our students to compete with foreign students, but do not provide the necessary tools to make our students competition material against the rest of the world.
Again, the problem are not undocumented immigrants, is the system and the abuse of it. I think I mentioned this before, while driving on Talmage towards Edison I read a handwritten sign hanging on a pole, ?20% Education, 80% salaries, vote no on the budget.? This sign reflected an ongoing debate, salaries and I am not talking about teachers. I am talking about administrators. Schools want to do better this idea that hiring top of the line administrator at unreasonable costs is also a false premise to produce a better student. And don?t think it is just public school having the problem. A recent study said that private education is not doing much better than public schools. They are faced with the same issues of raising educational costs.
I personally think that education should be federally funded as in those countries we want our students to compete with. It should be unitary, meaning having an uniform curriculum. And property tax should be reduced by half with a requirement that part of that property tax reduction be used for students that are having problems in public federally funded schools. And don?t forget, the abolition of county governments.
Focus on the problem Clone, not on your personal bias.
JRZ Sanity on 1 Aug 2006 at 10:51 am: 11
Plain vanilla representative government no longer works in NJ, we have seen demonstrative proof over the last 20 years with soaring taxes and entitlements built into the state constitution. We need voter initiative and referendum and recall, even with a high bar for signatures. California, years ago, showed voters thoroughly fed up with killer taxes, and with Prop 13, they DID something about it. Do we have the bravery to throw off our shackles and start lobbying for it?
nEo on 1 Aug 2006 at 12:43 pm: 12
I would lobby for IR- but only if it is designed to address issues of government spending and taxes.
By the way, I was watching Univision last night- sometimes I watch soaps- and there was a report on one of the news brief. In Texas one could buy a brand new home for an average price of $133.000. What is going on in Texas that is not happening in Jersey?
nEo
nEo
nEoCLONE on 1 Aug 2006 at 3:37 pm: 13
wOw, We now see that nEo gets his daily talking points from MoveOn.org. A real rational group headed by Michael Moore. The wacko left does not understand middle class American values. We can’t expect anything but long winded whining from the likes of nEo. Short if not non-existant on facts and long on accusations and convoluted thoughts. Exactly why liberals can’t win national elections. Keep supporting ILLEGAL activity and promulgating the welfare state nEo. You keep proving us right.
nEo on 1 Aug 2006 at 5:39 pm: 14
Actually, I have never been to moveon.org and again, I do not ascribe to labels. And I dont understand why these attacks. You talking about some left that I am not even aware of. You are comparing me to them because you think I am extreme thus giving the left negative publicity or whatever. Well, I hate to break it to you, but my thoughts are formulated by me- I do not need help from left or right. So, I suggest you find another way to get at them, because through me you will not get anywhere. As far as national election goes, I will say one thing- Clinton. Name a Republican administration more capable than that one- and dont say Reagan, cause it is not going to fly.
nEo
Hot Air Action on 2 Aug 2006 at 9:47 am: 15
Lots of talk and opinions, but no action being contemplated, except for the suggestion about I and R. True, it may require a convention on the state constitution, but it’s not unheard of. Politicians discreetly bank on the complacency of voters and it appears to ring true. We’ve thrown in the towel and let ourselves be led around by the noses.
nEoCLONE on 2 Aug 2006 at 9:54 pm: 16
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High Tax Lo Value on 3 Aug 2006 at 9:46 am: 17
The tax levels are one thing, but in many towns, it’s a ridiculous low value in return. Take North Plainfield, the schools have dragged their tails for over a decade in standardized tests, and still sit at the bottom of the county roster. I cringe every time I see a ”report card” of all NJ schools in the papers and have to see the embarrasing low rank we hold.