Philadelphia and Camden, N.J. at dusk © Jerry Driendl, Getty Images

"Does it make economic sense to move out of New Jersey?"

That's the troubling repeat question from clients that led David Bugen, head of the wealth management firm RegentAtlantic in Morristown, N.J., to commission a study: "Exodus on the Parkway: Are taxes driving wealthy residents out of New Jersey?"

"We were selfish," Bugen says. "We wanted to make sure we can keep our clients and be responsive to their needs." But beyond his firm's interest (it has $3 billion in client assets under management), he hopes his research will open a serious dialogue regarding the tax climate in New Jersey.

His team found support for two significant trends: working millionaires leaving New Jersey for Pennsylvania, and rich Jersey guys and gals heading to Florida to retire.

The calculus for high earners moving to Pennsylvania is straightforward. New Jersey's top income tax rate is 8.97 percent; Pennsylvania's levy is a flat 3.07 percent. A reciprocal tax agreement (enacted when the states' taxes were nearly the same) says that if you live in Pennsylvania and work in New Jersey you pay the Pennsylvania tax.

"Major executives at large corporations based in New Jersey like Johnson & Johnson (JNJ) and Merck (MRK) live in Pennsylvania to save a tremendous amount in income tax," Bugen says. Discussion point: Repeal the reciprocal tax agreement.

Florida's big draw for retirees is that it is a no income-tax state. It also has no death tax. New Jersey's estate and inheritance taxes are a sore point for wealthy retirees.

New Jersey has the lowest estate tax exemption -- at $675,000 -- of all the states that impose death taxes. Even high-tax neighboring New York has a $1 million exemption, and Gov. Andrew Cuomo has proposed increasing it to match the federal exemption, currently $5.34 million. Discussion point: increase the state estate tax exemption.

When he talks to clients about the big move, Bugen says they fall into two camps. For people who have transferred to New Jersey, say to work on Wall Street for 15 years, it's easy for them to pick up and move because they don't have the emotional and family ties to the state.

For people who have grown up in Jersey, it's a harder decision. One client is ready to move to Florida, but his wife is involved in the local emergency rescue squad and doesn't want to give it up. When the couple sit down with Bugen, client to advisor but also friend to friend, they talk about how they could leave more money to their kids and grandkids if they left. "The world is based on incentives," Bugen says he tells them.

Bugen, 65, can relate to the conflicted group. He grew up in Belvidere, N.J., went to college at Rutgers, and lives in New Vernon (he also has a shore house in Spring Lake). He's planning to retire at the end of 2015, and he and his wife intend to stay put in the Garden State for the time being to be near family -- his mother-in-law and his two daughters live in New Jersey.

"We love New Jersey; that's why we're emotional about the topic," he says, but he says that moving out of state one day is a possibility. (He owns land in South Carolina).

Of the 540 clients surveyed, the largest concern was the state's high property taxes, then estate taxes, then income taxes. Discussion point: Consolidate municipalities to help lower property taxes.

There are other peculiarities to New Jersey that hit the wealthy hard: Not allowing residents to deduct their charitable gifts on their state income tax returns, and not allowing residents to carry forward previously realized capital losses to offset capital gains.

Paying more to the state than the federal government at tax time because of the inability to carry forward losses in New Jersey pushed one RegentAtlantic client quoted in the study to move: "That's what broke my back, and I said, 'That's it. I'm getting out of the state.'"

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