Questions Reporters Need to Ask

Following is an email I sent to the AP reporter in Trenton. My goal is to plant the salient questions reporters should be asking about this so-called education funding reform.

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As you report on this, here are a couple of questions to keep in mind.

1. The governor talks about adjusting funding to accommodate those who “live in the wrong zip code.” That could be taken a number of ways. Does it mean that state aid to schools will be based on each individual child’s household income? If yes, it is just one more implicit admission that education funding ought to be based on income and not property taxes. And, if so, how will this affect a district like Middletown Twp? We get aid from Trenton of about fifteen to sixteen percent. That is because we are a so-called rich district due to some very wealthy sections of the township. Will Middletown begin to get substantial aid increases? I doubt it very much.

2. As you might know. Middletown borders Keansburg, an Abbott district. The part of Middletown adjacent to Keansburg is of the same socio-economic strata. Keansburg gets aid of what, 80%? 85%? I am not sure of the exact figure. But the point is that a person living on one side of the street with an identical house and income to their neighbor across the street in the other town has either an imputed greater or lesser ability to pay property tax based which side of the border of they live. Is this fair? How will Corzine’s plan address that huge inequity.

3. Lastly, assuming Middletown will reap some sort of increase in aid, how much and how meaningful will it be? Corzine indicated there may be around a $500 million increase in education spending? Middletown’s education budget is somewhere over $110 million a year (I don’t know exactly, I have given up wasting my time paying attention other than always voting no on the budget). The taxpayer covers well over $80 million of it. (trying to be conservative with figure so I am not accused of exaggerating).

In Middletown, around 65% of the property tax bill goes to education. That means of the typical $6,300 tax bill, over $4100 is for the schools. What would constitute substantial tax relief? A $1,000 reduction? That, it seems to me, is the bare minimum. To do that it would take an additional $20 million from Trenton to achieve that number. With only $500 million available and 600 districts vying for the money, it is doubtful that level of aid would or could ever happen.

Furthermore, even if it did happen, how would it affect the taxpayers bottom line? The 25% decrease in their education portion of the tax bill will only translate into a little more than 15% overall property tax reduction. This is peanuts. This would only be returning people to where they were two or three years ago. And, keep in mind, this is a fantasy, best case scenario.

So, I hope you keep these points in mind as you question Lilo [former Gannett reporter and the governor's press spokesman] as well as legislators. These are the real bottom line questions. Don’t let them gloss over the reality with zip code distractions.

ZIP code Duplicity

Governor Corzine has a plan to revamp education funding. It appears to be just more smoke and mirrors. The sales pitch is “the current model leaves too many children out of luck simply because they live in the wrong ZIP code” Pithy, but meaningless as far as the overburdened property taxpayer is concerned.

Two of the many problems with the plan are the continued reliance upon using a community’s aggregate wealth to determine aid and thinking $400 million to $500 million in increased aid will begin to make a dent in sky-high property taxes. And that is what is driving this so-called reform.

The idea that low income students living in a wealthy district merit less aid than those in a poor district reveals the inherent contradiction of a needs-based plan governed by a community’s average income. Why should a needy student be penalized because he lives in the wrong ZIP code? Wait, isn’t that what is driving the governor’s thinking? How can he say he is helping those who live in the wrong ZIP code when he is penalizing an otherwise identical child because he lives in the wrong ZIP code? Confused? Our leaders depend upon us not thinking too deeply about these things.

The governor promises more education aid. But he has also guaranteed Abbott districts will not see reductions in aid and might even see an increase. Using $450 million and dividing by 600 districts, you get $750,000 each. That would be 0.6% of the Middletown Twp. education budget and 0.4% of the entire property tax bill. Anymore need to be said? You can contact me after I return from my round the world cruise courtesy of these huge property tax savings.

The real problem with high property taxes is they have nothing to do with ability to pay. Education must be supported entirely by the state with a dedicated income tax. Then funding based on individual student needs would be based solely upon those criteria and it would not matter which ZIP code one lives in.

And do not forget that even if the education portion of property taxes were eliminated we would still be at the same level of local property taxation as existed about ten years ago. Were you satisfied with what you paid then? Have your wages increased so much that this amount will now be a minor nuisance? Hah! I thought not. Don't be duped. We must eliminate the property tax for all things, not just education. Stop subsidizing your wealthy neighbors tax obligation.

Is bringing "tax equity" code for class warfare?

In a recent conversation with a N.J. senator, one reason given as to why eliminating the property tax and replacing it with an income tax cannot be done is that it could be construed or actually become class warfare. The concern is that the so-called rich would be unfairly targeted to pay more taxes than their fair share for no other reason than that they are rich. So, to legislate based on such motivation is not right and would be divisive.

If that were the case, I would agree. We should not unfairly target one class of people based simply on who they are or what they have. But this is not the case here. In fact, the reverse is what is the de facto situation in New Jersey.

The property tax is inherently skewed against middle, low and no income taxpayers. In actuality, in an ever-increasing degree, it inordinantly benefits those have the greater income.

In fact, the property tax system does exactly what the decryers of class warfare ostensibly are against: The property tax automatically causes those of a certain class to pay an unfair share of the tax burden. It targets those at the bottom. The less income you have, the greater percentage of that income goes to the property tax.

For example, the person with an income of $60,000 paying $6,000 in property taxes has an effective tax rate of ten percent. The person making $120,000 and paying $6,000 in property taxes has an effective rate of five percent. The person making $360,000 and paying the same $6,000 in property taxes is paying a measley TWO percent rate. Compare that with the retiree with $30,000 income who has an effective tax rate of TWENTY percent. That is ten times the so-called wealthy taxpayer.

There is already class warfare going on, and it is against those at the bottom, not those at the top. The demand for equity to be brought to the system is not based on some Marxist notion that the rich are inherently evil and automatically worthy of contempt. It is based on the biblical and basic American ideal of treating all equally and fairly, of not favoring one class of people over another. The property tax favors the wealthy at the expense of those less well off.

(I have not factored in how abuse of the farm assessment--something only possible for the wealthy--exacerbates the disparity even more; it is fodder for an entire post.)

We must put a stop to the class warfare against those least able to afford it.

End the Property Tax and restore fairness and equity to how we pay taxes.

Will elected leaders ever get it?

Municipal and state legislators continue in their failure to address the number one scourge of N.J. taxpayers: Property Taxes.

One wonders whether they are actually without a clue as to the only true solution or if they really are uninterested in bringing fairness to how we fund our schools, county and local government. Maybe they fear advocating change will hurt their political careers. Maybe they like the present unjustifiable system.

In the latest example, Howell Twp. residents turned out in droves to a town hall meeting to protest huge tax increases. They cited how severely $1,000 and $1,500 property tax increases along with rises in the cost of living in utilities and other areas are affecting low and fixed income taxpayers. They cannot afford it.

In response, the politicians never even consider the fundamental problem, which is the inherently unfair nature of the property tax. Instead, they point to corruption, the lack of and misdirected state aid. These are genuine problems. Abbott district funding and malfeasance by the same needs to be addressed. But fixing them will never remove the inequality of the present method, one that taxes with no regard to one's ability to pay.

New Jersey must stop driving people out of their homes and the state. People spend a lifetime building relationships with doctors, local services, friends, etc. In other words, they are a part of a community, contributing to and receiving from its life. But the property tax system is forcing greater and greater numbers of people to abandon all of this time and emotional investment. Families are split up as they have no choice but to pick up, terminate all these commitments and relationships, and leave. They are unwillingly forced to start all over. Often hundreds of miles away.

What is needed? We need a tax to fund education, county and local governments that is fair; one that does not penalize those on low and fixed incomes. The only one that meets that criteria is the income tax. It allows for changing income levels with instant, precise and automatic adjustment. No rebate program. No political squabbling over who should get a bigger piece of the state aid pie. It would be a thorough, sweeping and fair change. When are politicians going to get on board and really address this curse, the property tax?

The AARP does not get it either

The AARP does not get it. They, as do most "public interest" organizations, fail to see the property tax as insidious and unjust. Therefore they assume it must continue and base any and all "solutions" on that. They fail to see that many of the income-based issues seniors face are a direct result of huge proportions of their limited incomes being sucked up by property taxes.

I have written them and been blown off. They dismiss out of hand those who do not tow their line. Below is a post I made in response to their page "Divided We Fail" http://www.aarp.org/issues/dividedwefail/ . The focus is on the strains that healthcare costs present to seniors.

What I point out is that they fail to see their is one thing that could remedy a huge number of their members' dilemma: Eliminate the property tax. Do so would free up hundreds of dollars each month for low income, cash-strapped homeowners. They would be enabled to afford supplemental health insurance and no longer have to do without or turn to others for charity. This, in turn, would reduce the base of people government would have to assist, thus reducing governent expenses and also allowing more cash to be spent in areas presently cash-starved.

It is too bad AARP, one of the nation's most influential organizations, refuses to see the light. One cannot help but wonder if they suffer from the same malady as politicians: They talk about those in need but are beholden to and act on behalf of their wealthier doaners. Or maybe due to isolation from the experience of those most in need they suffer from the Marie Antionette syndrome: No bread? Let them eat cake!

Following is my post. I wonder if they will clip it or allow it to display?

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When is AARP NJ going to understand that if the property tax is eliminated, large numbers of the most vulnerable seniors--due to limited income--will then be enabled to afford supplemental healthcare insurance, along with many of the out of pocket expenses?

People who do not qualify to pay income tax are still paying $4,000, $6,000 and much more each year because property taxes are not based on one's income, their ability to pay, but just because one owns something. Free this money up and we will tremendously reduce how many people are not able to afford supplemental health insurance and/or associated medical care expenses.

The fact is there is an income component to the property tax, but the state and AARP refuse to acknowledge that is what makes it totally and completely unjust. State aid is assessed on ability to pay. Ability to pay is based on imputed wealth to those not wealthy just because they have wealthy neighbors. The property tax ought to be eliminated and replaced with the income tax.

The tacit admission by the state that ability to pay is the fundamental issue is revealed in that rebates are based on one's income. This means that income ought to be the basis of collecting taxes for schools, municipalities and the county, not merely because one owns a piece of property. Why have income as a qualifying factor if property taxes are regarded as fair and just as is?

Get with it AARP of NJ. Stop playing the game with self-serving state politicians and self-interest groups (can anybody say NJEA?) who need the present unjust system to continue in order to perpetuate the gravy train of unrestrained annual tax increases so they can continue to payoff their constituents (developers and public employee union members). Why don't you start acting on behalf of those your purport to represent? We are waiting.

Another sham tax reform

The fact that there is an income based component to this so-called rebate is a tacit admission that the Property Tax is inherently unfair. Low income property taxpayers subsidize wealthier ones to the tune of 3 times the rate. Until N.J. eliminates the property tax for all government services (county, municipal and schools) and rolls it into an income tax, there will never be spending reform. Income taxes will never be allowed to go up on an annual basis. The Legislature's hands will be tied. Today's Press editorial mentions the Legislature's "low regard for the intelligence and attention span of the voter" and how they are "counting on the gullibility of the electorate" when it comes to this Falls elections. I do not think the Press was saying our legislators are right, but the sad truth is they are. NJ voters repeated re-elect these same crooks time and again. I doubt they will be mistaken this year. Besides, voting out one party will not do anything. The wholesale change due to Florio's tax hikes did not generate any improvements when the Republicans ran the show. Whitman just began the trend of putting the state into hock. When the Dems took over, they followed her lead by doubling up this plunge to total fiscal chaos. Only a third party sweeping to power can afford any hope of real change. Nevertheless, if there is to be any hope of correcting the property tax it will only come through consolidating taxes into one tax to fund government services. That will make it crystal clear how much is being spend. It will eliminate the shell game of forcing a little county tax increase here, a little municipal tax increase there, a lot of education tax increase, with each entity pointing to Trenton as the cause but not really doing anything politically to change it. Until people get the idea of eliminating the property tax into their head, we are going to have a continuation of what is and has been: seniors driven into poverty and/or out of the state; lower income people unable to afforrd a home, and continued runaway spending by all levels of government.

The Ruse of Reform

The trumpets are blaring in Trenton. The so-called leaders of our state are congratulating themselves for a job well done. They have addressed the property tax issue in New Jersey.

One can only ask whether these people really believe themselves. If they do, they do not belong in Trenton. If they do not, they do not belong in Trenton. The corresponding question is whether the N.J. voter will continue their tendency to return these unscrupulous politicians to office in November? If the continual re-election of the Sharpe James and Wayne Bryants is any indication, sadly, the answer is yes. N.J. taxpayers keep getting what they vote for: Charlatans.

What has been overlooked by all sides in this vacuous effort is whether the property tax is a fair and equitable tax. It is not. It imputes ability to pay based on one’s neighbor’s ability (the so-called wealthy districts). It is structured so those with the least means pay at a rate of three times and more as those with the most. It cares not whether one has income or basic living needs met.

Here is an example of what Trenton deems fair: One taxpayer has a $50,000 income and a $6,000 tax bill. Another has $250,000 in income and a $12,000 tax bill. The first party pays 12% of their gross income in property taxes. The second pays 4.8% of income. The first has $44,000 left after paying property taxes, the second $238,000. Both will receive $1,200 in tax relief. But who really needs the relief here? According to Trenton, both. Common sense and fairness makes it clear our legislators have no sense of tax equity.

And there are others who would not stop at $250K. They think everyone, regardless of income level, deserves to receive relief. Relief from what? They claim it is unfair and unconstitutional. Fair? Where is the fairness in the property tax? There are many taxpayers who have far less than $50,000 in income who are even worse off. So why do those who are paying property taxes at one third the rate of those at the bottom deserve anything? They need to pay their fair share. We need to stop having the least able subsidize the most.

The scam of property tax relief will be ballyhooed by politicians and the media over the following month’s right up to the election. Regrettably, the demogoguery of telling voters a band aid is the equivalent of major surgery will work. At least long enough to get them two more years in Trenton. And N.J. will have allowed a truly historic opportunity to go by the boards.

Benefits of Elimination of the Property Tax

What benefits would result if the property tax were completely eliminated, with the revenue collected from another source?


• Fairness, equity and tax justice would be restored as this tax is eliminated, a tax which subsidizes those at the top on the backs of those at the bottom.

• The unjust system of home owners being imputed with an ability to pay higher (property) taxes simply because they have wealthy neighbors would be done away with.

• There would be a halt of the mass exodus from N.J. because remaining in one’s home would no longer be unaffordable.

• N.J. would become a state where one’s home was no longer in jeopardy of confiscation due to inability to pay property taxes.

• N.J. would become a desirable place to move to as an escape from high property taxes in other states.

• There would be a boost to the state economy due to a growing population due to the end of the exodus plus an increase in those desiring to live here.

• N.J. might recapture its soon to be lost Congressional seat due to its lack of population growth.

• Those who spend a lifetime paying off their home would have the security of knowing they will have a roof over their head until they die.

• Families would now be able to enjoy their latter years surrounded by family and friends of a lifetime instead of being forced to leave them due to the unaffordability of living here.

• Local officials would no longer be inclined to succumb to pressure from developers as the carrot of increased property tax revenue is dangled before them.

• The abuse of eminent domain by throwing people out of their homes would be greatly curtailed as local officials no longer need to choose between increasing property tax revenue through over-development and/or phony redevelopment schemes.

• Open space would be less threatened as local officials would no longer need to rely on over-development to increase property taxes.

• More retirees remaining in their towns of a lifetime would relieve pressure on ever increasing school enrollments because they would not be selling their homes to younger buyers with school aged children, thus reducing local education costs.

• There would be forced development of a fairer system for funding education based upon treating all students equally rather than favoring aggregately poorer communities over others.

• The mix of generations in neighborhoods would be more natural and balanced as retirees could now remain in their homes.

• The cost of owning a home would be reduced, increasing the possibility of lower income buyers qualifying for mortgage loans as property taxes are no longer factored in.

• There would be an increase in the home renovation economy as owners would be more inclined to make improvements since they no longer will be driven to move elsewhere due to ever-escalating property taxes. These expenditures are presently stifled because people do not want to spend thousands on renovations just to move on in a few years or because they need to save the money to pay future property taxes.

• Home improvements would be made without the corresponding “penalty” of increased property taxes due to an increased assessment, thus boosting the state’s economy.

• Those who lose their job, are unemployed for an extended period, who become disabled or who have a dramatic reduction in income due to a job change would not have to worry about property taxes consuming their limited resources for everyday living necessities.

• Those relying on Social Security and modest—if any other—retirement income would no longer have to choose between paying for medicines and food and utilities or their property taxes.

• There will be reduced state subsidization of medical costs for those barely surviving on limited incomes.

• Many will be able to afford healthcare insurance and/or long term care insurance as hundreds of dollars a month are freed up for such, thus relieving financial aid pressures on state assistance programs and health institutions.

• Once eliminated, property taxes will never again be able to haunt and plague us. They will do that if we retain them, only applying a band aid, and as is inevitable with every current plan to address them. Witness the governor’s "demand" to merely limit their annual increase to only four percent (greater than inflation for the past twenty years). This means they will double only every 18 years instead of every ten. We can also rest assured politicians will find ways around this to increase them anyway.

There are undoubtedly many more benefits to be had through the elimination of property taxes. Allowing them to remain will prevent any of the above benefits coming to pass.

Any negative results due to elimination of the property tax are hard to imagine. That is, other than the major bogus one which is repeatedly trotted out the minute real reform seems possible. It is a red herring, usually floated by those currently benefiting from the present system, those being subsidized at the expense of their neighbor. It is the demagogic claim that eliminating the property tax would mean other taxes would be raised. Of course other taxes would need to be raised to replace the lost revenue. That is not the same as increasing taxes overall.

The idea is to institute a more just way of funding government services. Only those who do not believe in tax fairness object to the shifting of tax burden away from those paying more than their fair share and who are least able to afford it unto those not paying their fair share.

To those who claim that we must first reduce government spending, we ask why? That is, why must it be first? Government waste and tax fairness are separate issues. The question the fairness of property taxes exists regardless of how high they are.

Wasteful spending, inefficiencies, pay to play corruption, etc. all need to be tackled, no matter which way revenue is collected. Property taxes have nothing to do with them other than they often end up paying for these excesses. Address the fairness and spending issues at the same time but separately.

It is time to come up with a new direction in the efforts to address property taxes. Just making them a little less painful is not a solution. If we do not make elimination of property taxes our primary goal then we will be revisiting this issue in a few short years, while none of the above benefits will ever be achieved.