More on the tax cut and cap package

From the Record/Herald:

New hurdle to tax relief: caps on local spending

North Jersey homeowners will still get a promised property tax credit this year, but there is a new hitch: Lawmakers must also approve a plan that would force towns to limit their local spending.

Governor Corzine and leaders of the Democratic-controlled Legislature announced the arrangement Wednesday as part of package of measures they say will get the now-stalled property tax reform effort moving.

Wednesday’s agreement essentially ties the fate of the promised credit to a plan that caps local tax rates. Many politically powerful groups — including the public school teachers union, local officials and municipal workers — have opposed such caps because they essentially limit spending.

“We have a concept that we believe works and we have to sell it,” Corzine said.

The agreement covers two of the biggest reform proposals but the third, a new way to pay for public education, will likely take several more months of work, Corzine said.
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The 20 percent tax credit would go to property owners earning $100,000 a year or less. Those earning $150,000 or less would get a 15 percent credit and those earning $200,000 or less would get a 10 percent credit.

The promised 20 percent tax break for New Jersey homeowners would mean a windfall for about 900,000 households in Bergen, Passaic, Morris and Hudson counties that earn $100,000 or less, or slightly more than 70 percent of property owners in the region, according to 2005 U.S. census estimates. Statewide, 1.4 million households would be eligible for the break, according to legislators.

The tax credit could cost up to $2 billion, with most of the money coming from an increase in the sales tax passed last year combined with $900 million that would have been spent on the Homestead Rebate program.
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North Jersey homeowners paid an average of 7.3 percent more than last year in property taxes, according to a recent analysis of tax data by The Record.

The median property tax bill for North Jersey homeowners is $7,169, the analysis shows. That’s up $488, an increase of 7.3 percent from the 2005 median.
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Household income – Size of tax credit

Earning $100,000 or less – 20 percent

Earning $100,001-$150,000 – 15 percent

Earning $150,001-$200,000 – 10 percent

$200,001 or higher – no credit