New Jersey 49th Of 50 In Economic Outlook

By Morgan Sweeney | The Center Square contributor, The Center Square New Jersey

(The Center Square) – In the most recent edition of the recurring report Rich States, Poor States, New Jersey ranked 49th for economic outlook and 44th for economic performance from 2010 to 2020 among U.S. states.

The report is published by the American Legislative Exchange Council. The leading economist directing the report is Arthur B. Laffer, former member of former President Ronald Reagan’s Economic Advisory Board, known for the “Laffer curve,” and supply-side economics.

Rich States, Poor States predicts states’ future economic health, based on standing in 15 policy variables all heavily influenced by state legislatures. It also features a backward-looking component, where it ranks states based on three variables: State Gross Domestic Product, Absolute Domestic Migration, and Non-Farm Payroll Employment.

The study summarizes its findings with the observation that, generally, states that spend less and tax less fare better than those that spend and tax more.

The top-five states for economic outlook, in order, were Utah, North Carolina, Arizona, Oklahoma, and Idaho. The last six included the states that contain America’s most iconic cities – Illinois, coming in at 45, California, at 48, and finally, New York, at number 50.

The Garden State ranked 47th for both its Top Marginal Personal Income Tax Rate of 11.75% and its Property Tax Burden, which amounts to $51.21 per $1,000 of personal income. It ranked 46th for its Top Marginal Corporate Income Tax Rate, Personal Income Tax Progressivity (change in tax liability per $1,000 of income, according to the study), and for Recently Legislated Tax Changes per $1,000 of personal income.

By contrast, Utah, the state ranked No. 1 for its economic outlook, has a Top Marginal Income Tax Rate of 4.95% and a Property Tax Burden of $24.31, both figures less than half of New Jersey’s.
New Jersey’s state Gross Domestic Product experienced a cumulative growth of 25.53%, an Absolute Domestic Migration of -527,505 people, and a non-farm payroll employment rate of 0.73%.

Utah, the No. 2 state for economic performance according to the report, had 66.48% cumulative growth in GDP, Absolute Domestic Migration of 97,860 people, and has a cumulative non-farm payroll employment rate of 30.59%.

The findings of Rich States, Poor States echo what former chief economist for the state of New Jersey, Charles Steindel, observed for think tank The Garden State Initiative – that New Jersey chronically lags the country in its economic growth.

“This ranking of states is a tried-and-true formula,” Laffer said. “If you believe incentives matter, and I do, state policies have the effect of changing those incentives at both the state and local levels. I think [the study] is a great way of picking winners and giving guidance on how states should be effectively governed.”

The focus of the work of The Center Square New Jersey is state and local-level government and economic reporting that approaches stories with a taxpayer sensibility.