To paraphrase a quote attributed to 19th century newspaper editor Horace Greeley, New Jersey accountants are pretty much saying to their clients, “Go south, y’all.”
As of mid-July, if you wanted to rent a U-Haul truck to move furnishings for a three-to-four-bedroom home from Knoxville to Newark, N.J., (a city of about 280,000), it would have cost $579; to move from Newark to Knoxville, the same truck’s cost: $2,376.
New Jersey accountants are partly the reason. In a survey, a high percentage of Garden State accountants are shown to be encouraging their clients to flee the high-tax, heavily-regulated state and get the heck out of Dodge – or rather, Newark and other New Jersey towns and cities – and head to sunnier, and less onerous, tax and cost-of living-climates.
Said CNBC on July 11, 2021: “Certified public accountants have a message for New Jersey-based clients: It’s time to move to a lower-cost state.
“That’s according to a recent survey from the New Jersey Society of CPAs, which found that 70% of professionals surveyed who have clients in the state have advised them to move due to the high cost of living.”
New Jersey accountants in the survey were suggesting to their clients seven states as destinations. Five states are in the South, Tennessee among them.
Taxes are key factors. For example, above and beyond federal taxes, New Jersey has a state income tax, with brackets assessed at 1.4% on the first $20,000 of taxable income, 1.75% between $20,001 and $35,000, 3.5% on taxable income between $35,001 and $40,000, 5.525% between $40,001 and $75,000, and 6.37 up to $500,000 in income, and 8.97% on more than $500,000.
New Jersey’s taxation division says corporate tax rates are 9% on adjusted entire net income or on the portion allocable to New Jersey, 7.5% for all corporations with entire net income of $100,000 or less, and 6.5% for all corporations with entire net income of $50,000 or less.
Tennessee has no personal state income tax, and its corporate tax rate is a flat 6.5%. Tennessee also has some of America’s lowest property taxes; New Jersey’s are among the highest.
New Jersey isn’t alone in helping to funnel folks to Tennessee. In case you’re wondering – as you probably are – a mid-July U-Haul rental for the same-size truck from Knoxville to Rancho Cucamonga, Calif., a city of comparable size, was $1,474. From Rancho Cucamonga to Knoxville: $5,721.
A U-Haul from Knoxville to comparably-sized Yonkers, N.Y., cost $599; from Yonkers to Knoxville, $2,456.
Apart from aesthetics and lifestyle, where someone’s treasure is, there also is their heart. And people have found that in Tennessee, they can keep more of their treasure while the government can take less. In January 2021, U.S. News said that Tennessee is the nation’s seventh-lowest state for cost of living: the photo used by U.S. News to illustrate Tennessee was taken in Knoxville’s Old City.
All of this is affecting housing availability and cost in Knoxville. On June 4, 2021, a News Sentinel report on housing prices said, “According to the Freddie Mac Housing Price Index, Knoxville's May home prices increased by 21.4% since May 2020 – a higher rate of increase than Chattanooga, Nashville, Tennessee and the United States.”
For every action there’s a reaction, and benefits come with a cost. As housing prices increase, more buyers, particularly first-timers, will find it hard to get into the market. As property valuations increase and population expands, so will government and its services, and with a corresponding pressure to increase property taxes.
People who live in Tennessee, and particularly East Tennessee, can feel good about already being where many in the country want to live – as they demonstrate by voting with their feet and coming here. It’s likely Tennessee accountants will rarely, if ever, advise clients to “Move north, young man. Or woman.”
This article first appeared in KnoxNews.
