By Art Gallagher
In a column published in The Star Ledger and at NJ Spotlight, Mark Magyar says no. Magyar says that like all the governors before him, except Florio, Christie is simply tinkering at the margins and that whether Christie serves one term or two, New Jersey’s property taxes will still be the highest in the nation.
Magyar, who was a policy advisor to Chris Daggett’s Independent gubernatorial campaign against Christie and Jon Corzine, makes the case that unless New Jersey increases income taxes and sales taxes with the State taking over a higher burden of education funding, that property taxes will continue to be a dispropotionate and inequitable source of funding for education and government services.
A good tax system is generally considered to be one in which income, property and sales taxes are in some rough balance, with each providing somewhere between 30 percent and 40 percent of total revenue for these three major taxes. That is the case in most states, but it is not the case in New Jersey, where property taxes actually make up 58 percent of the income/property/sales tax pie, with income taxes accounting for just 24 percent and sales for the remaining 18 percent.
The only way to actually lower property taxes in New Jersey to a competitive level with other states is to shift billions of dollars of the cost of K-12 education or municipal or county services to another major tax or taxes — with the income and sales taxes being the most logical choices — while simultaneously making sure that an effective cap prevents any new increase in school district and local government spending.
That is what Democratic Gov. Jim Florio tried to do in 1990 when he dedicated half of his $2.8 billion tax package to property tax relief, but most of the money was quickly eaten up by school districts and municipalities for new spending, and by the second year property taxes were rising again as rapidly as ever. Voter repudiation of Florio led to the election of a Republican legislature and GOP Gov. Christie Whitman, and scared politicians in both parties away from any meaningful attempt at overall tax reform.
Magyar makes a compelling case. Middletown Committeeman Gerry Scharfenberger made a similar case last August.
However, Magyar’s argument is a non-sequitur to the current debate happening in Trenton (and nationally).
Even if Christie and the legislature were to institute Steve Lonegan’s flat tax, increasing income taxes on the poor and middle class while reducing them on the rich, and even if they instituted Chris Daggett’s $4 billion sales tax increase, and used the new revenue to reduce property taxes, the problems that Christie is addressing would remain. They would just be paid for differently.
New Jersey, and many other states, has too much government. There are too many government employees making too much money and getting benefits that are too generous to sustain regardless of how the revenue is generated.
It is only by reducing the size of government on all levels, which means less government employees making less money with less generous pensions and benefits, that our overall tax burden will decrease. That is what Christie’s reforms are designed to do. By forcing the downsizing within the current system, rather than radically changing the way New Jersey taxes its citizens and then implementing cuts, Christie is demanding that municipal, county governments and school boards make the hard choices now. If Christie did it Magyar’s way, government and taxes would continue to expand.
Let’s first reduce the size of our governments. Once that is done we can address the way we pay for them.