David Tepper's gain is New Jersey's loss.
The hedge fund billionaire, founder of Appaloosa Management, officially changed his tax residency and corporate headquarters from New Jersey to Florida. People close to Tepper say he made the move to be closer to his mother and sister, who live in Florida.
Yet it could also save him hundreds of millions of dollars in taxes that would have gone to New Jersey.
According to Institutional Investor's Alpha, Tepper has earned more than $6 billion over the past three years. Given that the top tax rate in New Jersey is 8.97 percent, his tax bill for the state over that time frame could have been more than $500 million. Of course, his real bill was likely much lower, given charitable deductions and other accounting treatments. Yet he still likely paid in the nine figures to the state of New Jersey over those years.
In 2014, Tepper's pay dropped to a mere $400 million, from $3.5 billion in 2013. But assuming he has some good years ahead, the tax savings from his move to Florida — which has no income tax — could be in the hundreds of millions of dollars. The potential hit to the state of New Jersey is so large, in fact, that a state budget expert mentioned the loss of Tepper as a meaningful hit to revenues.
"We may be facing an unusual degree of income tax forecast risk if news reports are true that the person ranked by Forbes magazine as the wealthiest New Jersey resident has shifted personal and business domicile to another state," Frank Haines, the state's legislative budget and finance officer, told the the state Senate budget and appropriations committee on Monday.
Tepper filed to move his tax residency to Florida in December, and he officially moved the headquarters of Appaloosa to Miami in January. Tepper is one of a number of billionaire hedge-fund titans who have moved from the Northeast to Florida. Leon Cooperman and Eddie Lampert also have relocated to Florida, and the state is now home to more than 50 hedge funds.
While many say New Jersey's high taxes are chasing away all its rich residents, the state's millionaire count continues to grow. According to Phoenix Marketing International, New Jersey's millionaire population has grown from 207,200 in 2006 to 237,000 in 2015. Yet on that national ranking of millionaires per capita, New Jersey has fallen from second place in 2006 to fourth place in 2015.