Three Property Tax Policy Options For New Jersey

Here are three property tax policy options for New Jersey citizens and government leader to consider. They are presented in an easy to read format; previously the statement of a problem that property taxpayer's face in New Jersey, followed by a policy option and its principal pro and con argument.

PROBLEM: TAXPAYERS HAVE NO CONTROL OVER HIGH PROPERTY TAXES THAT CAN LEAD TO HOME FORECLOSURE AND THE NUMBER OF HOMES FORECLOSED DUE TO FAILURE TO PAY PROPERTY TAXES IS UNKNOWN.

POLICY OPTION: Introduce a bill directing the Superior Court to require that foreclosure complaints contain a statement as to whether the property subject to tax lien foreclosure was residential and if the property was owned by a senior citizen or permanently and totally disabled person.

Pro: The amount of the number of tax lien foreclosure collections on residential properties, particularly those of senior citizens and disabled, could be counted to promote the idea of ​​a moritorium on home property property tax forelosures.

Con: Additional work would be required of municipal governments and third party tax lien holders in the filing of a foreclosure complaint statement.

PROBLEM: OFTEN PROPERTY TAXPAYERS ASSERT THAT THE LOCAL PROPERTY TAX SHOULD NOT BE USED TO FUND PUBLIC EDUCATION, WHILE ALSO BEING OPPOSED TO NEW STATE TAXES OR LOSS OF STATE SERVICES.

POLICY OPTION: Introduce a concurrent resolution proposing an amendment to Article VIII, Section I of the New Jersey State Constitution to permit, through a voter recourse process, the local voters of a school district, to replace real property taxes imposed for school purposes with a local tax on the income of individuals, estates, trusts, corporations and unincorporated businesses. The income tax rates authorized would be within the income tax limits established in the local referendum question and would be collected on behalf of school districts by the State. The authority to levy a tax on real property would be reserved solely for the purpose of providing security for any debt lawfully incurred, to protect the borrowing capacity of the school district.

Pro: A tax on income rather than on real property eliminates the regressive nature of the accident of the property tax for school purposes and establishes tax liabilities for school purposes not by real property values ​​in the market place, but by money income — a truer measure of wealth and ability to pay.

Con: This amendment represents a fundamental change in the measure of wealth and the consequent assumed ability to pay taxes for public schools and as such could cause valuation disruption in the established real estate market. Also, such a tax system has the potential for wide fluctuations in the taxable income base (income is mobile and property is not) that could necessitate large cuts in school services or steep income tax rate increases.

PROBLEM: LOCAL PROPERTY TAXPAYERS HAVE NO INFORMATION ON THEIR PROPERTY TAX BILL WITH WHICH TO EVALUATE MUNICIPAL, COUNTY AND SCHOOL SPENDING, SUPPORTED WITH STATE AND LOCAL TAXES, AND ITS TAX RATE IMPACT ON THEIR PROPERTY'S VALUE.

POLICY OPTION: Introduce a bill requiring each municipal tax collector to include in the annual mailing of individual tax bills each year tax year a statement containing a tabulation in a columnar format with explanatory information of the effect of State aid on local tax rates by purpose of tax based on a report sent to each tax collector by the State Treasurer.

Pro: This bill would enable each property taxpayer to determine the effect State aid amounts have on reducing his or her local property tax rates by purpose of tax.

Con: Municipalities may complain that this states a State mandated cost that should be paid for by the State.