Property tax rebates lead to higher property taxes

A popular New Jersey Gubernatorial campaign promise this year (and the last campaign as well) is to offer property tax rebates. Voters should think seriously about the wisdom of this.

Let’s review the situation. It is true that on average New Jerseyans pay some of the highest taxes in general and property taxes, in particular, in the nation. However, let’s remember that our taxes fall in to two big buckets (for the most part). First, the state taxes us to pay for road construction, social programs, parks, enforcement of laws and also a large portion of our local school cost. Second, municipalities tax us for city services like police and fire, the balance of school costs and their portion of county administration costs.

Each level of government sets its own budget and its own tax rate. At the municipal and county level, the preponderance of tax revenues is collected in the form of property tax. The State collects income and sales tax.

In theory, local governments either manage their affairs poorly or perhaps decide to offer up gold plated services that will have large budgets and therefore high taxes. However, there are many forms of poor management. Some wealthy towns have big budgets but relatively low tax rates. This is because they’ve managed to attract high value property to their town. I’ll use Princeton as the classic example: They have a gorgeous municipal library and great schools yet their tax rate is just over 2%. Trenton is the opposite example. It has attracted very little high value property and therefore has a very high tax rate (just under 5% and climbing) and failing libraries and schools.

Another form of poor management happens when towns and schools refuse to share services. We’ve all heard that New Jersey has more school systems than Texas so it shouldn’t be a surprise that Texas and New Jersey are on opposite ends of the tax burden spectrum.

Voters in Trenton and other high tax rate cities should be angry. They should be angry enough to seek out candidates who will turn around their cities and eventually lower taxes. They should be reminded about their tax problem, which is of their own making, and have their noses rubbed in it every time they pay their tax bill.

Enter the property tax rebate. The State is promising to help get local politicians off the hook by subsidizing their mismanagement.

But where does this tax rebate money come from? Why the same tax payers, of course. This is a shell game that shifts responsibility for bad municipal management from local politicians, where it belongs, to state politicians who are unaccountable.

Voters in healthy towns should be outraged at the notion of paying for the mistakes of voters in unhealthy ones.

There’s nothing wrong with the state giving taxpayers rebates. However, the state should be rebating your income tax not your property tax. Let’s please demand that we keep responsibilities for spending and raising money aligned. When they’re not aligned you get … well, you get New Jersey.

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