From the AP via Newsday:
Households earning less than $100K to get 20 pct property tax cut
The 20 percent property tax break proposed by state lawmakers will go to households that earn $100,000 or less, meaning nearly 70 percent of New Jersey homes will get the sweeping cut, legislative leaders announced late Monday.
Assembly Speaker Joseph Roberts Jr. and Senate President Richard J. Codey said other households will still get property tax relief under the plan being formulated, though the amount hasn’t been decided.
They said targeting a 20 percent property tax cut to households earning $100,000 or less would help those most burdened by property taxes that in New Jersey are twice the national average, at $6,000 per homeowner.
“It’s a very, very significant portion of folks who are struggling every day to pay their property taxes,” said Roberts, D-Camden.
“The percentage of their income that goes to property taxes is high,” said Codey, D-Essex.
A 20 percent cut for the average state homeowner would be about $1,200.
…
Legislators hope to enact reforms by year’s end, although changes to school funding and finalizing the tax credit plan may take longer.Codey said Monday it’s a “possibility” that those earning more than $100,000 could get property tax cut breaks of 10 or 15 percent. He said nothing’s been decided, but he and Roberts said such taxpayers will get some relief.
Codey has previously said those earning more than $300,000 likely wouldn’t receive any property tax cut. He said Monday legislators continue to discuss a cutoff, but he wouldn’t disclose a number.
“We feel pretty confident we’ll get this resolved in the next couple of days,” Roberts said.
Hmm. Won’t this bring down the total cost of ownership on the lower end of the real estate market? What impact will that have on prices in that segment?
When rates were lower a few years ago, I heard the theory bandied about that prices were rising in part due to the lower rates decreasing the total cost of ownership.
Assuming that’s true, it’d be ironic if this move by Trenton ended up pricing out even more
Hm, my last post got truncated.
I meant to say “… it’d be ironic if this move by Trenton ended up pricing out even more less than 100K households out of the market”.
From the Star Ledger:
Property tax relief expansion in works
The state’s top lawmakers expanded their proposal for property tax relief yesterday, saying they plan to cut 20 percent off the tax bills of all homeowners with annual incomes up to $100,000.
Senate President Richard Codey and Assembly Speaker Joseph Roberts said the plan, which would cover over 70 percent of New Jersey homeowners, is being hammered out in negotiations with Gov. Jon Corzine.
We’re working it out. … We want to get the 20 percent credit to everyone making $100,000 or less,” Codey (D-Essex), said as he and Roberts left a two-hour meeting with Corzine. “We’re just trying to work out all the details, and we’ll continue working on them.”
Corzine later said there is no final agreement.
“We’ve still got a few details to work out,” said the governor, as he left the Statehouse after the meeting. “I certainly hope we’ll be able to do something like that.”
The legislative leaders would not say how much the property tax plan would cost or where all the money would come from, saying those are among the details to be ironed out. Ending the current property tax rebates for most homeowners would pay for part of the program, along with money from the recent increase in the state sales tax.
“Every time we sit down with the administration it’s to try to identify as much revenue as possible to provide as much relief as possible, and we’re simply working through the details now,” said Roberts.
Does this also apply to renters who pay property tax indirectly? I feel a sliding scale is a more appropriate method with phaseout at higher incomes.
I’m not sure what the newest iteration holds for renters, but I believe renter tax relief was promised early on.
jb
In recent years, 2002-2005, if you were making less than 100k how do you afford a decent house in a nice town in NJ??? A family of 4 making 100k a year does not need a tax break, especially since they will be paying more for this???
Taxing income more and real estate less is a fair solution. I’m happy to see it coming along… and happy to pay my part.
This is not the worst idea so far, and they are getting close to what I expected. I have been pretty hopeful so far, but as I haven’t heard anything about the systemic changes that are clearly necessary, I don’t think they are getting at a long-term solution. Sad.
Time to repeat my main point:
Until they do something about the ability of municipalities, school districts, and fire districts to impose taxes, they are not addressing the real issue. It’s a 5 year solution at best.
“Taxing income more and real estate less is a fair solution”
curiousd,
That’s why high quality, good paying jobs are fleeing the state. Remember, we were told that the millionare’s tax would ease the burden of homeowner’s with the property tax rebates. Well the state p*ssed right thru that money. The problem is not solved with raising taxes. What about the increase in state spending from 15b-32b in JUST the last 5 years??? Where is this addressed in their equation???
Lindsey is right, at this point it’s a band aid at best.
Great !
More class-warfare gimmicks !
From the Asbury Park Press:
Convention next hope if property tax reforms fail
New Jersey’s No. 1 problem is the property tax. It is oppressively high. It is unfair. It is causing people to leave the state. And all agree this tax must be substantially reduced.
But the question of how to reduce property taxes has divided state policy activists into two camps. One declares: “This is the job of the Legislature. Let them do it.” This camp, consisting of the state’s Democratic leadership, has prevailed. Four legislative task forces have been meeting in special session since July with the expectation of adopting a property tax reform program by the end of the year.
The second camp of tax reformers points to the failure of the Legislature, after many attempts over the years, to produce fundamental property tax reform. These are the skeptics who favor removing the issues from the Legislature and letting a citizens tax convention, with delegates elected by the people, do the job.
We are now three-quarters of the way through the legislative special session process, and where do we stand? Will the 98 recommendations of the task forces give us true reform?
…
The real danger now is that New Jersey will continue on the slippery slope of hoped-for property tax relief based on recommendations that are either cosmetic or have little chance of implementation. And this might go on for months or years. The day of reckoning must come Jan. 1. If fundamental, quantifiable and sustainable property tax reform is not fully achieved, we must change course and go to the convention.
20% huh?
Well here are the money quotes IMHO:
“The reforms propose revamping school funding and public worker benefits and doing more to entice local governments to consolidate and share services.”
and
“The plan would also be funded by money earned from this year’s sales tax increase. It could be funded in future years by money earned from selling and leasing state assets such as toll roads. ”
So basically, 20% cuts WON’T go to the towns who WON’T agree to 20% fewer school administators, 20% cuts in union benefits, 20% less dollars for sports/arts programs, etc. At least half the towns in Union County won’t play ball here. They would sooner keep the higher taxes and have control over education. Homeowners who bought in pre 2000 will still be forced out if they can’t keep up with their skyrocketing property tax.
Not sure how much the increased sales tax would offset the lower property tax. The selling and leasing of state assets like toll roads lost some politicians their seats in Indiana. If the government spends the revenue from a 99-year lease in 10 years, we are all screwed.
#9, I am not suggesting that this is the TOTAL solution, but of the 2 evils (taxing income or taxing assets, like RE), i’ll take taxing income.
The whole ‘class arguent’ is crap anyway. I don’t see people leaving NYC because of the city tax. Good jobs and good skills is where it all happens.
Yes, I am one of those +100K ‘screwed’ people.
A statewide cap of 100K is unfair. The cost of living varies widely in New Jersey. The cap amount should be based on county.
“The whole ‘class arguent’ is crap anyway.”
#13
Just go read what James Hughes (Rutgers) has to say regarding migration patterns pertaining to NJ. Glad you approve of your income getting taxed to swell the coffers of our spend happy state.
#13:
“I don’t see people leaving NYC because of the city tax. Good jobs and good skills is where it all happens.”
Yes, you are right. I might be the one moving back to NY/NYC, if NJ continues to raise income tax and other taxes. Economics 101, in most cases, higher tax rate doesn’t mean higher collectible tax. It is a vicious cycle if NJ continues to raise tax: higher tax rate–>more people leave–>less tax –>higher tax rate.
Don’t be surprised to see that NJ will be bankrupt someday (
I am very disappointed with this announcement. People aren’t fleeing from NYC or any of the 5 boroughs because taxes are more reasonable!
Set the tax relief on income is not fair. With the amount of well paying jobs in NJ, a couple just starting out can be clearing say 105K aren’t supposed to be as affected as a family clearing 95K?
I think they are setting the income amount way to low. 100K may be considered ‘comfortable’, but by today’s standards it can not be considered wealthy enough not to deserve the full tax break!
So I can have income of 101k and one child and be taxed more than my neighbor who has income of 95k and has 8 children? Who is putting a bigger strain on the school system here?
You really don’t need a degree in Economics to realize the implications here. Worst case scenario, mass exodus of professionals out of the state. Two couples each earning $50k+ does not equate to a wealthy household. They may not be poor but forget trying to save for college.
Best case scenario, towns with the potential for gentrification (Plainfield, Rahway, etc.) have a mass influx of upper middle class residents who want the lower taxes. Sure, they will have to send their kids to private school but since they would otherwise bear the larger burden for their lower income neighbors anyway, it will all even out.
It doesn’t really matter, like the Asbury Park Press article states, these reforms have little hope of being implemented. Hot air is cheap.
In all my years in business, every company that has ever employed me has faced budgetary concerns. The answer has never been to raise prices on our goods and services, it has always been to cut costs. Improve labor efficiencies. Leverage buying power, etc. I thought Corzine was a businessman, maybe he was just never very good at accounting?
Seneca — My point exactly!!!!!! Well said!
The proposal simply moves tax money from one bucket to another. It fails to address the core issue, that property taxes are too high to sustain, no matter who pays them and how much is paid.
“Cut” property taxes 20% and you will see them “paid” elsewhere, be them sales taxes, income taxes, special assessments, etc. The only fix is to lower the actual property tax rate.
corzine is a bus.man problem is
hes also a pol of the lowest caliber.
you don’t really think he has the taxpayers
best interest in mind.
hes got his.
Corzine for President
I can also see this encouraging more undeclaired income. Something that has been mentioned here before.
Another issue like the AMT there reaches a point as a single guy who soon when done with school could be getting close to that AMT point with a little OT that it is a discouragement to work harder, thus making more money, and paying more taxes and eventually spending it.
Oh look we can pay 6K on our property taxes or 26K , oh wait most people need both big incomes to buy anywhere. Never mind I’ll return to lurking
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