Real Property Tax Reform

The New Jersey State League of Municipalities (NJSLOM) yesterday trotted out a property tax reform proposal that framed the problem well:

New Jersey needs to cut property taxes dramatically to improve the state’s competitive position as a place of business, to attract high income taxpayers working in New York City and Philadelphia, and to make it affordable for families and seniors to stay and for young couples and new graduates to buy homes here.  Fifteen New Jersey counties rank in the top 25 in the country in property taxes. We need to cut property taxes about 35 percent – the equivalent of shifting most of the cost of basic public education – if we want to make property taxes lower in North Jersey than in the New York and Connecticut suburbs and lower in South Jersey than in the Philadelphia suburbs.

On board so far but the next line takes us seriously off the rails:

The only way to do it is by shifting a significant portion of the property tax to other broad based state taxes

The only way?  Really?  Have the NJSLOM people even glanced at a Union County budget or attended a freeholder meeting?*  Are they taking as a given that this dysfunctional electoral process we inherited maximizes efficiencies in governing at the local level?

I think not and I have my own modest proposals.

What NJSLOM seeks is to redefine income tax brackets so that one rate applies to all income rather than the graduated system we have now.  New Jersey currently has a top marginal rate of 8.97% on income over $500,000. The proposal is to lower that rate to 8.5% but apply it to all income.  For example a couple making $600,000 would pay $37,782 now but $51,000 with the change (35% more) yet the focus would be on that .47% reduction.  As incomes increase the 8.5% is a bigger factor and there is even a cut in taxes for those making over $3,412,340 so the really rich do get a break at the expense of everyone else.

But rather than tricking the innumerate making under $3,412,340 into paying more how about acknowledging that the mechanism in place to provide basic government services contains a substantial waste component and concentrate efforts on these common senses reforms:

  • Tax campaign contributions at 100% so at least some bribe money benefits taxpayers
  • Pay all government employees in salary.  No Defined Benefit plans or OPEBs where costs get ludicrously understated
  • Make elected office real work.  In every other field meetings take up only a tiny fraction of the job and are designed to set agendas and review progress.  In politics they’re the whole job as budgets lie unread and ‘consultants’ and county employees are delegated duties for which they’re handsomely paid*.  See how many of these vain leeches scurry when you require them to sample ten years of audits instead of ten varieties of pastry?

Make just these changes and you will get your 35% savings in property taxes and it won’t be coming from other taxpayers.

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* Union County may be an extreme example.  God I hope so but if anyone in other counties has ever had their government put on three day rock festivals so that their county manager could take two-week hiking vacations to exotic locations around the globe I’d be willing to reconsider my position.

31 responses to this post.

  1. Posted by patomgarvey@comcast.net on June 12, 2013 at 12:53 pm

    Hi John, I like your recommendations. Do you have a breakout of the top 25 highest property tax counties in the USA? If possible please send to me. Thanks, Tom Garvey President, Summit Taxpayers Association

    Sent from my iPad

    Reply

  2. Posted by Anonymous on June 12, 2013 at 12:54 pm

    Real estate taxes, business taxes, fees, and other disguised taxes will be the death of NJ. The same shit (excuse me) goes on everywhere but we can have the same or better quality of life for a whole lot less money in other states like DE and FL. Even PA real estate taxes are very low as comoared to NJ. The only irony is that the public leeches are now forced to live in NJ if they want to work here except for those who were grandfathered. So many friends have moved to NC and FL. Our son who is highly educated just moved to FL. Real estate in NJ has become a liability.

    Reply

  3. Posted by Tough Love on June 12, 2013 at 1:06 pm

    The MOST important of your suggestions is this one:

    “Pay all government employees in salary. No Defined Benefit plans or OPEBs where costs get ludicrously understated”

    And it should apply to the FUTURE service of ALL CURRENT (yes CURRENT) NJ Public Sector workers (State, County, City, Municipal, “authority”, etc.)

    Specifically, we must freeze ALL current DB Plans … ZERO future growth,replacing them with a retirement package comparable to what Private Sector taxpayers typically get…. Social Security, and a 3-5% of pay “match” into a DC Plan.

    And instead of ANY Retiree healthcare cost “subsidy”, an HSA should be set up for each employee, again with a modest taxpayer contribution comparable to what Private Sector taxpayers typically get (which isn’t much, and is most often nothing).

    So instead is just shifting the SOURCE of taxes (from property to income), address the REAL problem, the EXPENSE side of the income statement, of which pensions and OPEB promises are the BIGGEST problems , BY FAR.

    Reply

    • Posted by Anonymous on June 12, 2013 at 4:09 pm

      TL. You must admit that in addition to the excessive pensions the amount of spending is a problem too. All of these bogus commissions, authorities and the like borrowing and spending our hard earned dollars!

      Reply

      • Posted by Tough Love on June 12, 2013 at 7:50 pm

        Of course I agree, but in actual $$$ it’s peanuts compared to the just the EXCESSIVE portion (that ABOVE WHICH comparable Private Sector workers typically get) of pension and benefit promises.

        Reply

    • Posted by MJ on June 12, 2013 at 7:46 pm

      TL, why do you think any taxpayer contribution should go towards public health benefits as their salaries are equal to or more than comparable private sector jobs and they work less hours each week and have more paid holidays throughout the year.

      Reply

      • Posted by Tough Love on June 12, 2013 at 7:56 pm

        Bottom line …. Public and Private Sector “Total Compensation” (annual cash pay plus the value of annual pension and benefit accruals) should be the same.

        Right now, cash pay in the 2 sector is very close in all but a very few occupations, but the Taxpayer paid-foe share of PUBLIC sector pensions and benefits are ALWAYS
        MULTIPLES greater in value at retirement than those of their Private Sector counterparts.

        That excess needs to be eliminated, and for the FUTURE service of CURRENT, not just new workers.

        Reply

  4. Posted by Anonymous on June 12, 2013 at 1:54 pm

    Hey Tough Love,
    Government will continue to suck your bank accounts dry as long as you have the money. Do you really think you are going to change that. I suggest you move out of NJ if you think there is hope somewhere else. You are fooling yourself if you think anything is going to change. Apparently you have the money to remain.

    Reply

    • Posted by Tough Love on June 12, 2013 at 2:42 pm

      Sounds like you might be one of the Public Sector workers on the receiving end of this excessive gravy train. No apologies if it disturbs you that I’m doing what I can (educating readers here and on other sites) as to the enormous financial rape being perpetrated upon them by the Public Sector Unions/workers and the elected officials who let it happen.

      I never said change would be easy, but gotta keep trying …… and yes, I have the money to remain, but I just don’t like where too much of it is being wasted (unnecessarily excessive pensions and benefits).

      Reply

    • Posted by Anonymous on June 12, 2013 at 4:35 pm

      The people who can afford to will move out of NJ as is happening now. Much better to take less for your house than to be stuck with the liability of ever riding real estate taxes. The public leeches who must live here in order to work here and the needier who are more dependent on government will be the majority of who is left. Government will always be dipping into our pockets but at a much much lower rate else where

      Reply

  5. Posted by Anonymous on June 12, 2013 at 3:39 pm

    let it collapse…….stop trying to help the public takers

    Reply

  6. Posted by Javagold on June 12, 2013 at 3:45 pm

    NJ real estate is toxic……its a liability……….mortgage rates ticking up….home equity has now gone underwater as each month by month goes by……..fraudclosures in a held back pipeline…….corrupt public takers increase the property taxes year after year……now the home and flood insurance premium scam has been found out and big FEMA increases are coming…..and sprinkle in the NJ corruption and waste

    The American Dream is a NJ NIGHTMARE DEATH SPIRAL !

    Reply

    • Posted by Anonymous on June 12, 2013 at 4:03 pm

      Sigh, yes Java it is the American nightmare and we have been asleep for way too long. I wonder myself how the FEMA debacle will effect home values and how it will play out.
      Standards of living are way way too high and unrealistic to begin with. At least the bozos in charge are talking about the pension problems. As soon as they figure out how to keep theirs but screw the other leeches, it’s fame over.

      Reply

    • Posted by Tough Love on June 12, 2013 at 4:22 pm

      FEMA rates should reflect the true risk. They have ALWAYS been too cheap near the shoreline.

      Those who want a home on the shoreline should pay the full insurance cost for the associated risk. There is no justifiable reason for the Taxpayers in general to subsidize a portion of that cost via under-priced flood insurance premiums.

      Reply

      • Posted by Javagold on June 12, 2013 at 4:33 pm

        not arguing that fact at all……but what do you think happens when you change the rules of the game in the middle of the game……on top of all the other items I listed above……N J bills are unsustainable for most property tax paying homeowners

        WE NEED TO STOP FOOLING OURSELVES !

        Reply

        • Posted by Anonymous on June 12, 2013 at 4:47 pm

          The same thing that happens when you change the rules in the middle of the game for pensioners and pensioners to be! Some will be okay and some will not. Taxpayers should not be paying for others flood insurance nor should we be paying for someone else’s retirement at 55 no less

          Reply

          • Posted by Tough Love on June 12, 2013 at 8:01 pm

            Greed HAS consequences. The Public Sector retirees/workers who counted in this pension/benefit EXCESS lasting forever, deserve a good part of the blame.

            Perhaps the more intelligent among them should have asked the question …”IS this REALLY sustainable”, and if not, “what will be the consequences” ?

  7. President Andrew Jackson stated December 5, 1836:

    “No people can hope to perpetuate their liberties who long acquiesce in a policy which taxes them for objects not necessary to the legitimate and real wants of their Government…

    The practical effect of such an attempt must ever be to burden the people with taxes, not for the purposes beneficial to them, but to swell the profits of deposit banks and support a band of useless public officers…

    There would soon be but one taxing power, and that vested in a body of men far removed from the people…

    The States…would not dare to murmur at the proceedings of the General Government, lest they should lose their supplies;

    all would be merged in a practical consolidation, cemented by widespread corruption, which could only be eradicated by one of those bloody revolutions which occasionally overthrow the despotic systems of the Old World.”

    Reply

    • Posted by Tough Love on June 12, 2013 at 11:24 pm

      Seems like President Andrew Jackson had incredible foresight.

      Did you note the words ….”support a band of useless public officers…”

      Reply

      • Foresight or a smart student of history, having had mother England to know what happens!

        Reply

      • Are you lumping first responders into that? Because if you are, then clearly you cant read intelligently so as to understand it does not mean first responders and is meant to implicate politicians. Also, by trying to slur first responders, you reveal yourself to be one of those who feels they have been slighted or offended by one of us, and you couch your true intent which is retaliation and punishment not on a genuine tax burden concern, but on a petty personal agenda. If that is the case, then I feel sorry for you, nd sorry that you waste a intelligent mind ona wrongful endeavor.

        Reply

    • I find that not only was the quote about taxes, but ends with the accurate development of corruption which is appropo:

      ll would be merged in a practical consolidation, cemented by widespread corruption, which could only be eradicated by one of those bloody revolutions which occasionally overthrow the despotic systems of the Old World.”

      Reply

  8. New train of thougt. What impact does govrrnment mismanagement impact this topic? Christie, for purely politically based, selfish reasoning, thought nothing of throwing 24 MILLION to having a special election one month before the regular one? I think this exemplifies and overrides any squabling over private v public fault or influence. What other waste like this could or should alleviate almost all the issues don’t ya think? But note that NO ONE is challenginng the misconduct of waste, instead I think there is a challenge along political lines.

    Reply

    • Posted by Tough Love on June 13, 2013 at 1:14 pm

      You asked …”What other waste like this could or should alleviate almost all the issues don’t ya think?”

      While Christie certainly had other (and cheaper) options than the Special Election, if you’re suggesting that such waste even REMOTELY approaches the cost of the waste associated with just the “excessive” (unnecessary and unjustified) share of Public Sector pensions and benefits promises, you either:

      (a) vastly underestimate the enormous cost of these grossly excessive pension & benefit promises, or
      (b) do understand the true (huge) cost of that excess quite well, but are trying to deflect attention AWAY from it …. perhaps because you are a Public Sector worker or retiree benefiting from it.

      Reply

      • When I began my career as a “Public Sector Worker” my yearly salary was Fourteen thousand. That means that had I been killed doing my duty to protect you and yours, my family would have had to eke out a living based on that amount. So dont begrudge me and my kind a just and proper and EARNED pension after a full career of dodging the bullet, sometimes literally, because you are upset about the ridiculously exhorbent tax burden. We pay it too. Instead, use the example of the twenty-four milion to expose the big picture of waste and fraud by Government itself. If that type of money can be tossed away to simply satisfy the political machinations of one man, how much moreis similarily leaked from the tax fund coffers? I can assure you that at least half of the total operating expenditure for my State and even the US government, could be cut without affecting justified and legitimate fuctions, programs, etc. All political pensions and benefits amount to what I am sure is a staggering figure, yet shouldnt even be allowed in the first place! Being a politician is not a career!

        Reply

  9. Posted by MJ on June 13, 2013 at 8:19 pm

    I think I understand the problem but after following this blog for so long I’m not sure what I think will happen and when? Seriously, my real estate taxes are 11,000 for a nice home in a modest neighborhood. How much higher can real estate taxes go before there is a breaking point?

    Reply

  10. Posted by MJ on June 14, 2013 at 8:58 pm

    I guess it can always be worse!

    Reply

  11. Posted by George on June 14, 2013 at 11:44 pm

    High property taxes keeps out the riff raff. Just imagine what the Jersey Shore would be like if those kinds could afford to live there.

    Reply

  12. Posted by MJ on June 15, 2013 at 7:08 am

    Hate to break it to you George but “those kind” do live at the Jersey shore if you mean welfare queens, illegals, low income, etc. who are also being supported by us taxpayers. On more than one occasion I have been behind someone in the grocery story who is paying with food stamps while I have to pay full price for the items that I am purchasing. I thought it was the beach tags that kept “those kind” off the Jersey shore beaches.

    Reply

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