I've already commented on Governor Christie's 10% tax cut proposal, which sounds like a wonderful idea, except that it's not a wonderful idea. As Mark Magyar wrote in Sunday's Newark Star-Ledger, the real problem in New Jersey is high property taxes, not the income tax rate. This comes on the heels of another report which said that New Jersey's property tax rate rose at its lowest rate in 2011, an average of 2.4%.
To get an accurate picture of just how the governor's proposal would affect the average taxpayer and homeowner, let's take a look at both numbers, the income tax cut and the average increase in property taxes, and see what the real effect would be.
According to the Magyar article, a New Jersey taxpayer with an income of $50,000 pays $709 in income taxes. A 10% cut would save them $71 after 3 years. New Jersey's average property tax bill is $7,758. A 2.4% increase would be $186.19. Therefore, the average New Jerseyan would actually lose $115.19 on the transaction.
A taxpayer with a $100,000 income pays $2,446 in income taxes, and would save $244 dollars with the income tax cut. If they have an average tax bill, they would see a savings of $58, given a 2.4% increase. Assuming that someone making $100,000 lives in a town with higher property taxes such as Clinton in Hunterdon ($9558), Hightstown in Mercer ($8345) or Matawan in Monmouth ($8259) their savings would be $15, $44, and $46 respectively with a 2.4% increase in property taxes. Those savings would be phased in over 3 years. Don't spend it all in one place.
Of course, If you live in the higher tax towns in Bergen, Essex, Morris or Somerset, you'll actually lose money on the transaction. Hello Demarest (average income earner loses $89), Millburn (loss of $167), Mountain Lakes (loss of $165), and Montgomery, the new home of Acting Education Commissioner Christopher Cerf, (loss of $141).
You can see the property tax figures by town in this chart (click on property tax data under What's New? or Taxes in Your Town).
The key point is that taxpayers would lose even more when you factor in the services that would be lost because the state would be about $1 billion dollars poorer due to the cut in revenue. This presumably means (Christie hasn't released his budget figures for the year yet) that towns and municipalities would see even less state aid and less school aid, which means that taxpayers would need to contribute more to maintain the services they already have. And even with the changes in public worker pensions and benefits, the cost of health care continues to rise, school enrollment in most towns also continues to rise, which means they'll need more teachers and services, and we still need to maintain roads, bridges and other projects that sustain our lives. If you want improvements, that costs more.
On Monday, the state released a statement saying that tax revenues for this year will be about $300 million dollars less than they anticipated. Where is there money for a tax cut in a state that's struggling to pay for basics as it is?
So the question becomes, is the income tax cut worth it? For many people, the answer is no because they'll lose money. For others, what are you giving up for your $15, $44 or $46 dollars? Quality of life? Good schools? This is what Democrats need to argue as they begin debating the bill. We don't need to be the pawns in the governor's endgame for a 2016 presidential run.
For more, go to: www.facebook.com/WhereDemocracyLives