Make Ôexit tax' head to the exit

When people talked about an "exit tax," it used to be a crack about how "one-way" tolls at Delaware and Hudson river bridges are collected on the Jersey side the price of escaping New Jersey for the supposedly more charming, more livable, New York or Pennsylvania.

Now, there's apparently a different kind of "exit tax" in New Jersey. Some people have to pay it if they sell a house here, and they're going to another state. It can be withheld from the proceeds at the time of the sale.

According to an article that originated at the Star-Ledger of Newark, the idea was to prevent homeowners from heading to North Carolina or wherever (probably because of high New Jersey taxes in the first place) before they paid New Jersey all taxes due on the sale of their Jersey home. Maybe that makes sense in principle, but the execution of that principle leaves much to be desired.

Some jurisdictions collect the tax, but others may not be doing so. State Department of Taxation officials can't say for sure how much this tax brings in every year. There's some disagreement among assessors, appraisers and real-estate lawyers about to whom the tax applies. And nobody knows who started calling it the "exit tax" in the first place.

What is known is that legislation calling for the tax was enacted under former Gov. Jim McGreevey. It's basically a way of collecting the capital gains tax on the increased value of a home from its purchase date. Under most interpretations, it's supposed to be paid only by folks whose primary residence is not in New Jersey, such as sellers of a second home, since full-time Jersey residents are supposed to be liable for any capital gains taxes on their next state income-tax return. (They don't need to be tracked down in Wyoming.)

Whew!

In any case, the state taxation department says it was never asked to track the "exit tax" since it went on the books in 2004. So, the state doesn't even really know how many people have paid the tax. (Remember, there can be sizable exemptions, up to $500,000 for couples, before capital gains taxes kick in.)

There's only one thing to say about a New Jersey tax that a) produces an unknown and possibly unstable amount of income for the state; b) isn't imposed consistently everywhere in New Jersey; c) isn't crucial enough to have the state's "revenuers" go after people who do not pay it:

Get it off the books! Show it the exit!

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