We thought the Press had gotten it right on property taxes a while back when it pointed out the tax itself is inherently unfair. It is the only tax which takes no account of one's financial circumstance. No other tax is like that. Earn less money and income taxes go down. Buy few things and you pay less sales tax. The property tax oppresses those least able to afford it and at income to tax paid rates which could never be approved of for an income tax.
I live in Middletown. It has done everything it can to take advantage of purchasing through the county, inter-local agreements, reduction in staff. We also have the 12th largest school district in the state. One would think the economy of scale point of the editorial would be reflected in Middletown. But taxes have never gone down; they always go up. These things ought to be done regardless of the source of the revenue source. That is what responsible government is all about.
The point is that there is not enough savings in the system to eliminate the oppressive nature of property taxes. People thought they were too high twenty years ago when they were half of what they are today. To think forcing towns to consolidate is a panacea is naive.
The only answer is to eliminate the property tax. It must be replaced with a tax which will adjust when one's circumstances change. It is the only one that does not do this. If you lose your job or take a cut in pay or retire, income taxes go down. Spend less money and you will pay less sales tax. You can never say that about the PT.
There are countless other benefits to ending the property tax (E.g., no more drive for ratables. Retirees no longer choosing between eating or medical or paying taxes.) NJ needs a fair and equitable tax, which the property tax is not. Check out more:
http://endpt.wordpress.com/issues/detrimental-effects/
http://save-our-homes--our-future.blogspot.com/2007/01/benefits-of-elimination-of-property.html
Sunday, July 24, 2011
Sunday, August 29, 2010
When will they ever get it?
The front page of the Asbury Park Press, again, has an article on the devastation the property tax inflicts on fixed, low and middle income home owners. And, once again, everyone they interview misses the point: The property tax ought to be eliminated. It is not a fairly assessed tax which is merely too high. It is an inherently unfair, inequitable tax.
What seems to confuse everyone is there is a separate issue at play. That is, spending is too high. The focus on controlling spending is legitimate. But lowering spending can never make the property tax fair. The less income one has,the more it places a disproportionate share of funding upon one's shoulders.
That is why the picture insert caption has the homeowner complaining that one third of his take-home pay goes to paying property taxes. I wonder what six figure income home owner would need to say that? Especially if you look at those making mid and upper six figures. How many of them are paying $200,000 and $300,000 in property taxes?
Property taxes in NJ are too high! So say the Press, the governor, legislators, columnists and just about everyone. In response they think that if we just cut enough bloat, property taxes will go down and everyone will then be happy. This is misguided thinking, at best. At worst, it is intentional misdirection. Does anyone really believe there can ever be reductions of meaningful amounts such as 30% or 40% so that despite the inequity they are more of a nuisance tax than a burden?
The reason property taxes are the most hated is because they exact taxes without regard for ability to pay. This is why replacing them—not supplementing— with a local income tax is the answer. No longer will one be imputed with ability to pay just because there are wealthy people living in the same town.
If there were a local income tax, you would kill two birds with one stone:
First, taxes would not be unfairly assessed on those unable to afford them.
Second, you would see immediate fiscal responsibility in budgets for the schools, town and county. Why? Because people will not stand for automatic annual increases in an income tax. If that were possible, Trenton would be doing it every year. They don’t.
The property tax is from a time when one’s property directed correlated with their ability to generate income. That is no longer the case. So, it is time for the Press and all the rest to get on board with this plan to really address the bane of the property tax once and for all.
What seems to confuse everyone is there is a separate issue at play. That is, spending is too high. The focus on controlling spending is legitimate. But lowering spending can never make the property tax fair. The less income one has,the more it places a disproportionate share of funding upon one's shoulders.
That is why the picture insert caption has the homeowner complaining that one third of his take-home pay goes to paying property taxes. I wonder what six figure income home owner would need to say that? Especially if you look at those making mid and upper six figures. How many of them are paying $200,000 and $300,000 in property taxes?
Property taxes in NJ are too high! So say the Press, the governor, legislators, columnists and just about everyone. In response they think that if we just cut enough bloat, property taxes will go down and everyone will then be happy. This is misguided thinking, at best. At worst, it is intentional misdirection. Does anyone really believe there can ever be reductions of meaningful amounts such as 30% or 40% so that despite the inequity they are more of a nuisance tax than a burden?
The reason property taxes are the most hated is because they exact taxes without regard for ability to pay. This is why replacing them—not supplementing— with a local income tax is the answer. No longer will one be imputed with ability to pay just because there are wealthy people living in the same town.
If there were a local income tax, you would kill two birds with one stone:
First, taxes would not be unfairly assessed on those unable to afford them.
Second, you would see immediate fiscal responsibility in budgets for the schools, town and county. Why? Because people will not stand for automatic annual increases in an income tax. If that were possible, Trenton would be doing it every year. They don’t.
The property tax is from a time when one’s property directed correlated with their ability to generate income. That is no longer the case. So, it is time for the Press and all the rest to get on board with this plan to really address the bane of the property tax once and for all.
Sunday, August 22, 2010
Do not let the lack of updates make you think this site is out of date. I have noticed that there are more and more calls in letters to the editor to eliminate the property tax. So my message might be finally taking hold or (more likely) others just see its inherent inequities and draw the same conclusion.
One of the biggest problems in getting this message into the heads of the average taxpayer is they assume the property tax's legitimacy or--worse--they see the need to eliminate it but figure it cannot be done and so conclude there is no point in trying.
How discouraging. Ideas are what have changed the course of history. They begin as an idea and then capture the imagination and heart of more and more people until they are integrated into the way they act and what they do.
It is no different here. To eliminate the property tax can easily be done if people would just change their mind that "it can't be done". There is nothing else stopping this from happening. There are no guns pointed at our heads. There is no "disappearing" of those advocating its end. There are no gulags people are exiled to. It is only their own defeatist attitude and thoughts that prevents this.
What about those who think it is a fair and equitable way to collect revenue to fund government? They are either willfully blind or simply do not care about fairness and equity in the taxing system.
It is not complicated. If fairness and equity are guiding principles, no amount of other pragmatic, dogmatic nor idiotic (ignoring the obvious) argumentation should be allowed to trump an ethical matter. And that is what this is. Are we a people who are guided by transcendent principles or not?
One of the biggest problems in getting this message into the heads of the average taxpayer is they assume the property tax's legitimacy or--worse--they see the need to eliminate it but figure it cannot be done and so conclude there is no point in trying.
How discouraging. Ideas are what have changed the course of history. They begin as an idea and then capture the imagination and heart of more and more people until they are integrated into the way they act and what they do.
It is no different here. To eliminate the property tax can easily be done if people would just change their mind that "it can't be done". There is nothing else stopping this from happening. There are no guns pointed at our heads. There is no "disappearing" of those advocating its end. There are no gulags people are exiled to. It is only their own defeatist attitude and thoughts that prevents this.
What about those who think it is a fair and equitable way to collect revenue to fund government? They are either willfully blind or simply do not care about fairness and equity in the taxing system.
It is not complicated. If fairness and equity are guiding principles, no amount of other pragmatic, dogmatic nor idiotic (ignoring the obvious) argumentation should be allowed to trump an ethical matter. And that is what this is. Are we a people who are guided by transcendent principles or not?
Tuesday, May 26, 2009
The absurdity of the Property Tax
Here is a letter to the editor I recently had published in the Press (after I had to pare it down to their max of 300 words). It was in response to an editorial by couple of our illustrious Trenton legislators (Sarlo and Singer) who were "helping" NJ property taxpayers with legislation meant to make sure someone was not wrongly paying $100 (or some other absurdly insignificant amount) less than their neighbor just because they challenged their assesment and the other did not.
************************************************************************************
What would Trenton say to a proposal to invert the income tax table? That is, take the highest rates and apply them to the lowest income bracket and apply the lowest rates to the highest income earners. Sound absurd? It is. But it is exactly what the property tax does.
Take the $7,000 average PT being paid by four hypothetical home owners living on the same street in homes assessed at the same value.
Those earning $35,000 pay 20% of their income;
those earning $70,000 pay 10%;
earn $140K to pay only 5%;
be a retiree with $21K in fixed income and you pay a whopping 33%.
Lose your job and you are using your savings (a negative percent).
No other tax--especially of such a large amount--is required to be paid if either, one, there is no income or, two, if one chooses not to spend their money. The IRS does not knock on your door and say, "You paid $5,000 in income tax last year, so fork it over again now (even though you are not working)." Nor will you pay that $1,400 sales tax on that $20K car if you do not buy it. Nevertheless, if you own a home, you are required to fork over that tax which is the single largest or second largest tax a person pays at a rate of five to six times those greater means.
The example above does not having anyone paying any more tax than anyone else. But it does show how one taxpayer--the one with the least means and the greatest need for every penny they have--pays at a rate five to six times their neighbor (who, in the example, is not extrememly wealthy). In effect, they are subsidizing those at the top by paying a larger share based on ability to pay (the way the income tax works).
Is this fair? Can this be just? Obviously not.
So, this is the disparity Trenton should be concerned about, not that one person challenged their assesment and is paying maybe $100 less than their neighbor.
These legislators say they are concerned about fairness. They state that several times in their editorial. If they really were interested in tax equity, they would work to eliminate the PT, not tinker with it. Their efforts will do nothing to address the inhernent inequity of the PT.
************************************************************************************
What would Trenton say to a proposal to invert the income tax table? That is, take the highest rates and apply them to the lowest income bracket and apply the lowest rates to the highest income earners. Sound absurd? It is. But it is exactly what the property tax does.
Take the $7,000 average PT being paid by four hypothetical home owners living on the same street in homes assessed at the same value.
Those earning $35,000 pay 20% of their income;
those earning $70,000 pay 10%;
earn $140K to pay only 5%;
be a retiree with $21K in fixed income and you pay a whopping 33%.
Lose your job and you are using your savings (a negative percent).
No other tax--especially of such a large amount--is required to be paid if either, one, there is no income or, two, if one chooses not to spend their money. The IRS does not knock on your door and say, "You paid $5,000 in income tax last year, so fork it over again now (even though you are not working)." Nor will you pay that $1,400 sales tax on that $20K car if you do not buy it. Nevertheless, if you own a home, you are required to fork over that tax which is the single largest or second largest tax a person pays at a rate of five to six times those greater means.
The example above does not having anyone paying any more tax than anyone else. But it does show how one taxpayer--the one with the least means and the greatest need for every penny they have--pays at a rate five to six times their neighbor (who, in the example, is not extrememly wealthy). In effect, they are subsidizing those at the top by paying a larger share based on ability to pay (the way the income tax works).
Is this fair? Can this be just? Obviously not.
So, this is the disparity Trenton should be concerned about, not that one person challenged their assesment and is paying maybe $100 less than their neighbor.
These legislators say they are concerned about fairness. They state that several times in their editorial. If they really were interested in tax equity, they would work to eliminate the PT, not tinker with it. Their efforts will do nothing to address the inhernent inequity of the PT.
Wednesday, June 11, 2008
Blast from the past - some bad ideas never go away
Here is an article I wrote in October of 2006. It may have a few outdated references. But the points address the current suggestions of some politicians to grant local taxing authority. It is not a bad idea in and of itself. What is bad are the methods they propose. The bottom line is that politicians do not want to give up the cash cow of the property tax. They depend on it to cover the cost of profligate spending.
Local Taxing Authority - the Right Way and the Wrong Way
Thank you to Thomas McMahon for giving us the fuller picture regarding supposed cost savings to be gained through consolidating local school districts (Asbury Park Press County school districts won’t assure cost savings, 10/3/06 http://www.app.com/apps/pbcs.dll/article?AID=/20061003/OPINION/610030306/1030). His article serves as a warning for us not to mindlessly accept over-simplified solutions to high property taxes. Politicians are so inclined to sound bites over substance and to then believing themselves that we are in jeopardy of not really getting anywhere than to the governor’s capitulation of a reduced rate of property tax increases.
Buying into insubstantial fixes like consolidation is also why we must not allow the latest proposal of allowing localities to impose there own taxes to go down the wrong road. Builder fees and local sales taxes are gaining traction, according to recent reporting. We must scrutinize these ideas.
Builder fees may add tax revenue but they have severe shortcomings. They are not reoccurring. Homes and offices are built once. Areas that are built out would have limited, short-term benefit. As for towns that are built out, just as they are driven to chase ratables so as to increase property tax revenue, the thirst for builder fees would encourage more unneeded development and, likely, further abuse of eminent domain. Those not built out would be encouraged to do so with a vengence as they also chase more tax revenue.
Local sales taxes are equally problematic. They do not ensure tax revenue would remain local. Who shops exclusively in their own town? In fact, towns with a mall would see a windfall at the expense of other towns. On the other hand, unless every locality enacts a sales tax, people would be encouraged to spend their money where there is no or lower sales taxes. This would in turn harm businesses in the shunned town or simply drive all towns to enact a local sales tax. What an unhelpful and confusing mess.
We ask would local sales taxes be mandated to offset dollar for dollar local property taxes? We all know how politicians find ways to spend additional income rather than using it to reduce taxes. Does anyone believe things will be any different this time? Even with a mandate offset, they will find ways around it.
The sales tax is regressive. It begins with the first dollar you spend. That is, it forces those at the bottom and least able to afford it to pay more taxes. There was a huge uproar over raising the state sales tax 1%. Will the arguments against doing that be any less applicable when there is a two, three or four percent local sales tax?
The idea of local taxing authority is good. The methods proposed are not. What needs to be implemented is a local income tax. And it ought to replace the local property tax. Local taxpayers’ taxes will then remain local.
More importantly, fundamental fairness will be brought to tax funding of local schools and government. With an income tax, those who are struggling to get by on fixed or reduced income will no longer be burdened with carrying an inordinate share of local taxes. It will also eliminate the inequity of the low income taxpayer being imputed with an ability to afford more taxes just because his neighbor’s income means he lives in a “rich” district.
Therefore, local taxing authority can be a solution to inequities in the property tax. But that will only be as long as it is restricted to an income tax. Other kinds of taxes are illusions, non-solutions or will only shift the tax burden from one unfair method to another.
Local Taxing Authority - the Right Way and the Wrong Way
Thank you to Thomas McMahon for giving us the fuller picture regarding supposed cost savings to be gained through consolidating local school districts (Asbury Park Press County school districts won’t assure cost savings, 10/3/06 http://www.app.com/apps/pbcs.dll/article?AID=/20061003/OPINION/610030306/1030). His article serves as a warning for us not to mindlessly accept over-simplified solutions to high property taxes. Politicians are so inclined to sound bites over substance and to then believing themselves that we are in jeopardy of not really getting anywhere than to the governor’s capitulation of a reduced rate of property tax increases.
Buying into insubstantial fixes like consolidation is also why we must not allow the latest proposal of allowing localities to impose there own taxes to go down the wrong road. Builder fees and local sales taxes are gaining traction, according to recent reporting. We must scrutinize these ideas.
Builder fees may add tax revenue but they have severe shortcomings. They are not reoccurring. Homes and offices are built once. Areas that are built out would have limited, short-term benefit. As for towns that are built out, just as they are driven to chase ratables so as to increase property tax revenue, the thirst for builder fees would encourage more unneeded development and, likely, further abuse of eminent domain. Those not built out would be encouraged to do so with a vengence as they also chase more tax revenue.
Local sales taxes are equally problematic. They do not ensure tax revenue would remain local. Who shops exclusively in their own town? In fact, towns with a mall would see a windfall at the expense of other towns. On the other hand, unless every locality enacts a sales tax, people would be encouraged to spend their money where there is no or lower sales taxes. This would in turn harm businesses in the shunned town or simply drive all towns to enact a local sales tax. What an unhelpful and confusing mess.
We ask would local sales taxes be mandated to offset dollar for dollar local property taxes? We all know how politicians find ways to spend additional income rather than using it to reduce taxes. Does anyone believe things will be any different this time? Even with a mandate offset, they will find ways around it.
The sales tax is regressive. It begins with the first dollar you spend. That is, it forces those at the bottom and least able to afford it to pay more taxes. There was a huge uproar over raising the state sales tax 1%. Will the arguments against doing that be any less applicable when there is a two, three or four percent local sales tax?
The idea of local taxing authority is good. The methods proposed are not. What needs to be implemented is a local income tax. And it ought to replace the local property tax. Local taxpayers’ taxes will then remain local.
More importantly, fundamental fairness will be brought to tax funding of local schools and government. With an income tax, those who are struggling to get by on fixed or reduced income will no longer be burdened with carrying an inordinate share of local taxes. It will also eliminate the inequity of the low income taxpayer being imputed with an ability to afford more taxes just because his neighbor’s income means he lives in a “rich” district.
Therefore, local taxing authority can be a solution to inequities in the property tax. But that will only be as long as it is restricted to an income tax. Other kinds of taxes are illusions, non-solutions or will only shift the tax burden from one unfair method to another.
Friday, June 06, 2008
There is no substitute for a substitue
Recently, N.J. legislators have suggested localities be given authority to collect taxes in addition to the property tax. The idea is that the revenue would be used to reduce reliance on the property tax.
Immediately there were cries of outrage and condemnation. The essence of the complaint is that given another tax to collect, politicians will only take more and increase spending more. That is, the ostensible goal of reducing property taxes will fall by the wayside whenever there is more money coming into local treasuries.
Of course, this knee-jerk reaction has a point. Unless there were an iron clad rule that mandated all new taxes would go directly to reducing property taxes, these fears would materialize sooner than later. The only way to ensure reduction of property taxes would be to include a freeze of all property taxes with a corresponding mandate to use any increases in revenue to dollar for dollar reduction.
But even if such restrictions were put on, doubtless, politicians would still find ways to get around it. The governor has already shown us the prime example of this. He increased the caps on school budget increases from 3.5% to four percent. How could we guarantee such would not end up happening?
These realities are one more reason that the only way to address the inherent unfair nature of the property tax is to eliminate it completely. As long as it is there as a sponge to soak up uncontrolled government spending—especially at the state level—this tax will never be reduced to levels that it’s inequity would exist but be negligible when it comes to its affect upon those least able to afford it.
Eliminate the property tax by replacing it with a local income tax and watch what happens. Just as politicians are loath to raise the state income tax, so they would be any local versions. People would not stand for it. And if the authority to increase it required approval from Trenton then it would really seldom if ever happen.
Right now Trenton politicians have driven local taxes higher by their failure to control spending at the state level, as well as by the various mandates and preferential distribution of local aid to certain localities. They have forced localities to continuously increase property taxes without really being held directly responsible. When they are held accountable for increases in local taxes because they have to approve increases in local rates, you will find they suddenly see the light. Re-election and remaining in power is more important.
This is just one more reason the elimination of the property tax must be the stepping stone to reform of out of control government spending and mandates. If we do not begin here, we will never end the problem of high taxes and runaway spending.
Immediately there were cries of outrage and condemnation. The essence of the complaint is that given another tax to collect, politicians will only take more and increase spending more. That is, the ostensible goal of reducing property taxes will fall by the wayside whenever there is more money coming into local treasuries.
Of course, this knee-jerk reaction has a point. Unless there were an iron clad rule that mandated all new taxes would go directly to reducing property taxes, these fears would materialize sooner than later. The only way to ensure reduction of property taxes would be to include a freeze of all property taxes with a corresponding mandate to use any increases in revenue to dollar for dollar reduction.
But even if such restrictions were put on, doubtless, politicians would still find ways to get around it. The governor has already shown us the prime example of this. He increased the caps on school budget increases from 3.5% to four percent. How could we guarantee such would not end up happening?
These realities are one more reason that the only way to address the inherent unfair nature of the property tax is to eliminate it completely. As long as it is there as a sponge to soak up uncontrolled government spending—especially at the state level—this tax will never be reduced to levels that it’s inequity would exist but be negligible when it comes to its affect upon those least able to afford it.
Eliminate the property tax by replacing it with a local income tax and watch what happens. Just as politicians are loath to raise the state income tax, so they would be any local versions. People would not stand for it. And if the authority to increase it required approval from Trenton then it would really seldom if ever happen.
Right now Trenton politicians have driven local taxes higher by their failure to control spending at the state level, as well as by the various mandates and preferential distribution of local aid to certain localities. They have forced localities to continuously increase property taxes without really being held directly responsible. When they are held accountable for increases in local taxes because they have to approve increases in local rates, you will find they suddenly see the light. Re-election and remaining in power is more important.
This is just one more reason the elimination of the property tax must be the stepping stone to reform of out of control government spending and mandates. If we do not begin here, we will never end the problem of high taxes and runaway spending.
Wednesday, June 04, 2008
Middletown BOE Fails Taxpayers Again
The following is about a local education budget. But there is no doubt the name of the town could be anywhere in New Jersey. Boards of education everywhere are no match for the teachers' union, who have huge resources and years of experience in rolling over well-intentioned volunteer citiczens who are no match for them.
Wednesday, 30 April 2008
To the Editor:
Once again the board of education has failed Middletown taxpayers. Once again they have caved in to the teachers’ union. And, once again, they have saddled taxpayers with an above inflation three-year contract.
The three-year contracts commits to increases averaging 4.5%, compounding out to be 14.1%.
Since 1992, inflation has never gotten above 3.39%. It mostly hovered in the twos, sometimes lower. Regardless of such facts, board after board has succumbed to the union, granting above inflation settlements every time.
Exacerbating this unwarranted decision is their failure to take into account skyrocketing health care. It went up 9% last year. There is no reduction in sight. Did the board factor that in when figuring the contract?
Why is the idea of holding the line or belt tightening in hard economic times such a foreign concept? Or are such ideas only good for a laugh at board meetings?
Here is a real world fact: I pay $5,168 (38%) toward health care premiums, while my employer (a Fortune 500 company) pays the rest (62%). My co-pays on top of this add a few thousand dollars more to my annual medical expenses. At retirement, no free health care; I can buy into their health plan.
This is the real world the taxpayer lives in. When are public employees going to be asked to live in the same world along with the rest of us? When is the board of education going to stop capitulating by agreeing to gravy train contracts that drive property taxes ever higher?
This historic ritual of giving away the store is what led to such deterioration of Middletown school facilities that we had to borrow well over $100,000,000 to fix them. Yes, ONE HUNDRED MILLION DOLLARS. The reason is obvious: When one part of the budget goes above the State cap then another part must absorb the difference; that is simple math. One wonders if the board ever paid attention in their math class when they attended school. Of course, maybe the fact that they pay no attention to the plight of the taxpayer answers that question.
Wednesday, 30 April 2008
To the Editor:
Once again the board of education has failed Middletown taxpayers. Once again they have caved in to the teachers’ union. And, once again, they have saddled taxpayers with an above inflation three-year contract.
The three-year contracts commits to increases averaging 4.5%, compounding out to be 14.1%.
Since 1992, inflation has never gotten above 3.39%. It mostly hovered in the twos, sometimes lower. Regardless of such facts, board after board has succumbed to the union, granting above inflation settlements every time.
Exacerbating this unwarranted decision is their failure to take into account skyrocketing health care. It went up 9% last year. There is no reduction in sight. Did the board factor that in when figuring the contract?
Why is the idea of holding the line or belt tightening in hard economic times such a foreign concept? Or are such ideas only good for a laugh at board meetings?
Here is a real world fact: I pay $5,168 (38%) toward health care premiums, while my employer (a Fortune 500 company) pays the rest (62%). My co-pays on top of this add a few thousand dollars more to my annual medical expenses. At retirement, no free health care; I can buy into their health plan.
This is the real world the taxpayer lives in. When are public employees going to be asked to live in the same world along with the rest of us? When is the board of education going to stop capitulating by agreeing to gravy train contracts that drive property taxes ever higher?
This historic ritual of giving away the store is what led to such deterioration of Middletown school facilities that we had to borrow well over $100,000,000 to fix them. Yes, ONE HUNDRED MILLION DOLLARS. The reason is obvious: When one part of the budget goes above the State cap then another part must absorb the difference; that is simple math. One wonders if the board ever paid attention in their math class when they attended school. Of course, maybe the fact that they pay no attention to the plight of the taxpayer answers that question.
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