NJEA Needs a Mathematics Lesson

31 October 2004 @ 1:58 | Posted in » New Jersey, Politics

The lead article (NJEA members only) in November’s NJEA Reporter, the association newspaper of the New Jersey Education Association (of which I am forced to join), introduces a property tax reform plan.

New Jersey, like many (if not all) states, suffers from high property taxes. Property taxes fnd all sorts of things: the local school district, fire and police departments, county government, libraries, rescue squads, municipal governments, etc.

A common gubernatorial campaign promise in the Garden State is to not raise taxes. To achieve that, the elected governor cuts state aid to municipalities, which to continue the services it provides, is forced to raise property taxes. The governor sits back and says, “Hey, I didn’t raise your taxes.” Governor McGreevey is just the latest in a string of governors to short-change local government.

There is a call in the state for a Constitutional Convention to re-format how taxes are paid in New Jersey. Currently, a task force is investigating whether to call one.

While tax reform is welcomed, one would hardly consider NJEA a likely source for a meaningful plan. NJEA’s plan, The Property Tax Protection Guarantee Plan, is promised to be explained in detail in future editions of Reporter In the meantime, NJEA offers the following.

Currently, the average New Jersey homeowner pays about 7.3 percent of his/her income in property taxes. In Hudson County, homeowners pay 11.1 percent while in Salem County homeowners pay 5.3 percent. The NJEA plan caps property taxes at four percent of a homeowner's income. NKEA estimates that about 80 percent of homeowners would see a reduction in their property taxes under the plan. The remaining 20 percent would see their taxes remain the same.

Okay, it doesn’t take an accountant to realize that if this plan were to be used, fewer dollars would be available. If property taxes are capped at a lower level than current levels, there will be a shortfall.

Listen to what NJEA states: 80% of households will pay less, 20% will pay no more. But there is a hitch.

To offset the costs, top income earnersâ€”such as those earning over $250,000â€”would see a very slight increase in their income taxes.

Governor McGreevey tapped the wealthy this year to pay for the Property Tax Rebate program. Kerry will supposedly pay for his plans by taking from the wealthy. NJEA is piling on.

I was taught that if government taxes the rich too much there is no incentive for them to work. This NJEA plan would kick in at $250,000. If one were to make $230,000 but could hustle to make more for his family or to take a risk to develop a new technology for the betterment of all, a tax that would kick in upon success might make this person file his plan in a drawer and call it a day.

There is no doubt New Jersey needs property tax reform. The reliance on property taxes is burdensome. Shifting the balance of who pays does not resolve the issue. If revenues do not match expendtures, then either revenue needs to be increased or expenditures decreased. It really is a simple task.