Of course, just how far Greenwald’s idea will get remains to be seen.
Greenwald – a Democrat from Camden County – has drafted legislation that would allow towns to vote on imposing local income and sales taxes of up to 1 percent each that would go toward helping fund the towns and public schools in each locale. Currently, 98 percent of New Jersey’s taxes collected are from property taxes. The national average is about 70 percent. If Greenwald’s legislation is adopted, towns would then lower the property levy a dollar for each dollar collected through the new taxes.
Greenwald said the state sales tax would go down to 6 percent from 7 percent.
Greenwald’s inspiration came in part from neighboring Pennsylvania, though not everyone agrees that that is a good model to follow. Act 511, the 1960s legislation that led to widespread implementation of local taxes in Pennsylvania is sometimes referred to as the “Tax Anything Law.” No, that isn’t a compliment.
According to the 2008 census, local Pennsylvania governments collected $22 billion in taxes, with $15.5 billion coming from property taxes. In New Jersey, $23.2 billion were collected in local taxes and nearly all of it came from property taxes.
Many counties in Pennsylvania impose a 1 percent income tax and the revenue is split between the town and the school district. Most towns also have an annual $52 local-services tax. The money goes to police, roads and other city services. Other fees are paid for sewer and trash collection.
The ability of each locality to tax individually has often made things confusing for Pennsylvania residents but it has helped keep property tax rates down. In an analysis done in 2008 by the Philadelphia Inquirer, residents of several New Jersey counties (Burlington, Camden and Gloucester) pay about $820 more on property taxes than Pennsylvania residents on the other side of the Delaware River.
Pennsylvania’s system allows cities to spread out the tax-paying burden rather than putting so much of it in the hands of homeowners. Essentially it’s a case of not putting all your eggs in one basket.
New Jersey residents, though, already pay a state income tax – 5.5 percent for middle-income and 9 percent for higher-income earners. That’s significantly higher than Pennsylvania’s 3 percent.
Some argue that taxing income and sales at the town level could lead to even bigger trouble as both are affected significantly by the economy, making them potentially more volatile than property taxes.
One person who is not a fan of Greenwald’s idea is New Jersey’s governor, Republican Chris Christie. Earlier, Christie called the proposal “monumentally stupid.” Christie has been a proponent of cutting taxes, rather than spreading them out.
Many New Jersey legislators believe Greenwald’s ideas will die before they get very far. Maybe. But there’s no question that New Jersey citizens are struggling to keep up with their high property tax rates. The good news is, people are beginning to realize there is something they can do. No, you can’t change your tax rate. But you might be able to change your assessment, which could mean a savings of hundreds of dollars. Log on to ValueAppeal, enter your address and find out if you could join the hundreds of people ValueAppeal has helped to lower their property tax payment.
