Will Christie’s Reforms Reduce Property Taxes?

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.

Posted: March 1st, 2011 | Author: | Filed under: Chris Christie, Property Taxes | Tags: , , | 13 Comments »

13 Comments on “Will Christie’s Reforms Reduce Property Taxes?”

  1. Bulkemail-Marketing.com » What are some ways you can supplement your income from working at home? said at 1:04 pm on March 1st, 2011:

    […] Will Christie's Reforms Reduce Property Taxes? – MoreMonmouthMusings […]

  2. M. Ward said at 1:23 pm on March 1st, 2011:

    I feel as if christie has had an agenda to lower property taxes from the very beginning, but first he knows that he has to tackle spending and entitlements. Right now we’re in that phase, expect to see considerable tax reductions in the next two years

  3. When doing taxes, do you include the taxes paid from the previous year? | financial stocks answers said at 2:57 pm on March 1st, 2011:

    […] Will Christie's Reforms Reduce Property Taxes? – MoreMonmouthMusings […]

  4. 3 Tips to Sell Your Home Fast | Affiliate Reviews said at 3:10 pm on March 1st, 2011:

    […] Will Christie's Reforms Reduce Property Taxes? – MoreMonmouthMusings […]

  5. Pro Blogger News said at 3:20 pm on March 1st, 2011:

    Will Christies Reforms Reduce Property Taxes…

    […]Jim Florio tried to do in 190 when he dedicated half of his $2.8 bilion tax package to property[…]…

  6. Firesign58 said at 3:41 pm on March 1st, 2011:

    Art is right. Reducing our government footprint is the first thing. Excessive government in the form of endless programs, entitlements, laws and bureaucracies, as well as incredible waste (there is no incentive to be efficient in a government bureaucracy) – all contribute to creating a black hole for wealth and a permanent drag on the economy. Not to mention endless tax increases.

    Reduce government to its limited scope as envisioned by our founders. Allow market-driven and charitable solutions.

    “Government isn’t the solution to the problem; government IS the problem.”

  7. Effective insurance Agent Marketing Tips said at 3:43 pm on March 1st, 2011:

    […] Will Christie's Reforms Reduce Property Taxes? – MoreMonmouthMusings […]

  8. Gene Baldassari said at 4:38 pm on March 1st, 2011:

    Right on, Art.

    It is not as complicated as these “experts” try to make it.

    Just cut taxes in half. Cap and index them at some % of output. And you will automatically have the capped budget amount that will be available.

    At that point, I would not be as critical of how they send it. At least not now.

    And as long as either Party endorses candidates who do not face up to this simple solution, there will not be any Party support from me or many of my peers.

  9. brian said at 6:04 pm on March 1st, 2011:

    ……..when pigs fly.

  10. mike halfacre said at 6:07 pm on March 1st, 2011:

    I’m curious about his 58% property tax number. Does he factor in the fact that suburban property taxes are higher as a result of the subsidy the suburbs give to the Abbott districts?

    If the state evenly distributed all the education money, property taxes would plummet across most of the state. The court-imposed redistribution scheme skewers all the numbers.

  11. Will Christie's Reforms Reduce Property Taxes? – MoreMonmouthMusings « Double Taxes said at 6:19 pm on March 1st, 2011:

    […] original post here: Will Christie's Reforms Reduce Property Taxes? – MoreMonmouthMusings Comments […]

  12. MLaffey said at 11:42 am on March 2nd, 2011:

    Both are right to an extent.
    Certainly waste needs to be reduced at all levels of Government. Additionally public employee benefits must be reigned in.

    On the other hand State does need to send more money to local government because State mandates compromise a large portion of the property tax burden.

    I will also say that an artificial cap on local government budgets is not sustainable in the long term. It may be good in the short teerm to force local government to cut waste and be more effecient but their will come a point where it will cause cuts in vital services.

    The real focus needs to be on what government should be doing. Across the board cuts means that government will be doing the same things just not as well.
    From the federal level on down there needs to be a debate as to what government should and should not supply. The answer will be different depending on the level of government. An easy example is the Federal Government should not provide recreation programs for kids but it may be approriate for counties or municipalities to do so.

    We need to reach a consensus on the role of government at each level and stop trying to fix every problem at every level of government. We can have honest differences about what government should do or should not do but untill we realize it is trying to do too much that it shouldn’t do or can’t do well we will not have a meaningful reduction in any taxes.

    If the State got out of a lot of things it does I suspect it would have lots of money left over to lower property tax rates.
    That is where the debate needs to focus.

  13. brian d said at 12:01 pm on March 2nd, 2011:

    I have a mayor, a town council, freeloaders, state assembly, state senate, us rep, us senate, a gov and milhous.
    My first question is–exactly how many layers of people with their hands in my pockets–how many do l need.
    The govt is there to keep me safe and the roads open—everything else is self-created to ensure so many layers of useless people.