The State of New Jersey is facing a potential crisis this year because of one extremely wealthy man. Robert Frank’s article discusses hedge-fund billionaire David Tepper who recently declared himself a Florida resident after living in New Jersey for more than 20 years, a move that could cost New Jersey hundreds of millions of dollars in lost payments. The article begins,
Our top-heavy economy has come to this: One man can move out of New Jersey and put the entire state budget at risk. Other states are facing similar situations as a greater share of income — and tax revenue — becomes concentrated in the hands of a few.
Last month, during a routine review of New Jersey’s finances, one could sense the alarm. The state’s wealthiest resident had reportedly “shifted his personal and business domicile to another state,” Frank W. Haines III, New Jersey’s legislative budget and finance officer, told a State Senate committee. If the news were true, New Jersey would lose so much in tax revenue that “we may be facing an unusual degree of income tax forecast risk,” Mr. Haines said.
The New Jersey resident (unnamed by Mr. Haines) is the hedge-fund billionaire David Tepper. In December, Mr. Tepper declared himself a resident of Florida after living for over 20 years in New Jersey. He later moved the official headquarters of his hedge fund, Appaloosa Management, to Miami.
New Jersey won’t say exactly how much Mr. Tepper paid in taxes. But according to Institutional Investor’s Alpha, he earned more than $6 billion from 2012 to 2015. Tax experts say his move to Florida could cost New Jersey — which has a top tax rate of 8.97 percent — hundreds of millions of dollars in lost payments.
The hedge fund manager David Tepper’s relocation to Florida is a case study in how tax collection changes when income becomes concentrated in the hands of a few.
Read the full story here: One Top Taxpayer Moved, and New Jersey Shuddered
Posted by Allison Trupp, Associate Editor, Wealth Strategies Journal