When will they get it?

Beginning on July 28, there will be a special session of the NJ Legislature—which, it turns out, will only be a special session of special committees—to deal with the Property Tax. Well, not really. There are no plans to look at and propose solutions to the Property Tax as a tax in and of itself. They only intend to see how they can make it a more bearable tax, aka “reducing reliance upon”.

As this could be a turning point in NJ’s goal to stop driving people to the poor house and/or out the state due this oppressive tax, many are chiming in with their opinions. We have seen op-eds from the NJ League of Municipalities, the NJ Chamber of Commerce, current and former state leaders, taxpayer watchdog groups, columnists, newspaper editorials. The one thing they all have in common is they conflate two totally different issues. They see spending as the problem with property taxes. If spending were reduced then the Property Tax would remain acceptable as a tax source. Consequently, they automatically include the Property Tax as a fundamental part of the solution to addressing the issue.

It is time that our leaders and those who would devise a solution to come to the realization that high and out of control spending at all levels of government is not what makes the Property Tax a problem. The problem is the Property Tax is inherently unfair. Reducing how much people pay will not and can not address this fact.

The unfairness of the Property Tax is confirmed by the oft cited statistic that households earning the lowest 20% pay 9.2% of their income in property taxes, as compared with the top 20% who pay 3.6%; that is, the least able to afford it pay 2.6 times more. But that is just an average. The lower you go on the income scale the greater the share paid, as in the case of the widowed taxpayer who pays over seven times the percent share those at the top are paying. With $21,000 in income and $5,500 in taxes, she pays out over 25% of her income, not the average 9.2%. We need to be careful of statistics lulling us into thinking the situation is not as bad as it is.

So the statistics prove the Property Tax forces the subsidization of those least in need of tax relief by those least able to afford it. Neither will an across the board reduction of this tax change this disproportionate distribution of the tax burden. Simple mathematics prove fairness can never be achieved through lowering these taxes, the inequity is built in. Neither do measly rebates alleviate the situation. Short of a rebate of 50%, 75% or even 100% for those at the bottom, they will continue paying more than their fair share.

This is not to say that spending is not a problem. The variety of measures being offered as a way of reigning in spending are good ideas. They all ought to be implemented, but not because property taxes are too high. No, they need to be done because that is what good government is all about.

The only relationship the Property Tax has to the spending problem is that it has brought about an acute awareness of the need to address spending. That is because its inherent unfairness has progressively insinuated itself and become a major problem for more and more of those in the middle class. Politicians can no longer bank on ignoring those at the bottom because they are no longer the only ones being decimated by the Property Tax.

Nevertheless, the main point is that the Property Tax is inherently unfair. It must be eliminated in order to address that unfairness because there is no other way to do so. If the Property Tax is included in any solutions arrived at to lessen its present onerous impact, the cure will be short lived and quickly evanescing. It will only be a matter of five or ten years before, once again, it will be as onerous as ever and at the top of the issues in most need of addressing. Instead of wasting our time going down that road, let’s get it right today by eliminating it altogether.