Tax relief for Teaneck?
As more details of the plan to offer New Jersey homeowners substantial property tax relief emerge from Trenton, the plan appears less and less beneficial to Teaneck's situation. While many Teaneck households struggling to keep up with whopping property tax bills will get a substantial boost from a 20% state tax break, the Township of Teaneck's ability to raise revenue locally will not improve as much as some might have thought. Here's why: the plan under consideration would only award a 20% tax credit to households earning under $100,000 per annum. While those earning more may end up with some relief, it is possible that only a little more than half of Teaneck's households will realize the full benefits of the plan.
The 2000 Census pegged Teaneck's median household income at $74,903. Nationally, real median household income rose nearly 10% in the period from 2000 to 2005. Assuming Teaneck followed the national trend and that the town maintained a constant mix of income levels over the past half decade, the median household income for Teaneck in 2005 would have been $82,327 and about 40% of households would have taken in more than $100,000. Anecdotal evidence suggests, however, that ballooning property taxes and the abnormally strong housing market conditions of the period from 2003 to early 2006 may have caused a number of seniors on fixed incomes to sell out to younger people (who would have had to have higher incomes to qualify for mortgages), which could put the proportion of households eligible for the full measure of tax relief closer to 50%.
All this means that what Trenton giveth, Teaneck may not be able to take away. By delivering targeted tax relief at those with more modest incomes, state legislators are not necessarily making it any easier for municipalities to plug budget holes by hiking taxes just a little bit more than they otherwise would. This plan is not about municipalities and school districts (though other pending reforms may help there), it is about families. The message remains the same- Teaneck officials will have to keep on focusing on cost savings and alternative sources of revenue for the foreseeable future.
posted by Teaneck Blog @ 10:24 AM
4 Comments:
This tax relief presents a speciously appealing gift from the New Jersey Legislature to Teaneck residents. The resident of the average home in Teaneck assessed at $200,000 (pre-revaluation) would be paying $9,320 in property taxes, and could see a rebate of $1,864 under this proposal with a household income below $100,000.
The details in the referenced article leaked from a highly-placed source place those in the $100-200K household income range with a 15% rebate and those earning $200-300K at 10%. A family earning $150K in a $300K assessed home would see $2,097, while a family earning $250K in a $400K home (which would be reassessed at near $1 million) will still take home $1,864 in rebates, just as much as our average homeowner (though obviously less as a percentage of taxes or income).
While there certainly are families earning more than $300,000 per annum, a look at the 2000 Census data doesn't make it seem that too many will be out of the money (or that those earning over $300K per annum should feel too shortchanged).
The underlying issue is that it's all a giant con game. While Whitman raided pension funds and McGreevey used unconstitutional bond funding, Corzine's shell game is to raise sales taxes. Where will the money come from? That extra 1% you're paying on all taxable items and the 7% imposed on a whole cornucopia of newly taxable items. The Lord may giveth and taketh away, but the government taketh's away and then makes a really big show of giveth'ing back some portion of the revenue it taketh'ed in return.
The other problem is the disconnect between your property tax bill -- paid quarterly to Teaneck directly or via escrow -- and the refund that will come back separately from the state, emblazoned with Governor Jon Corzine in big bold letters, just to remind recipients that this has little to do with your property tax bill.
The solution is not whipping up a new way to create the false perception that rebates will solve the property tax crisis. The problem that we face is that we spend far too much at every level of government: Municipal, School, County and State. It's not funding, it's spending.
We have little control over what goes on in the state or at the county level. But we can make a meaningful dent in our municipal and school spending. As multiple state reports have shown, Teaneck spending is significantly out of line with our neighbors. We need to look through our budgets, and see how many of our other area municipalities and school districts are providing the same services better, cheaper and more effectively.
A one dollar rebate is just a false savings that came out of one dollar in extra sales tax paid over the year. One dollar in savings from reduced spending is one dollar off your tax bill (OK, 80 cents given the reduced tax rebate). Multiply those cost savings by a factor of 100 or even 1,000 and your talking real savings that really stay in your pocket.
There is no real way to provide tax relief for Teaneck residents than to do it ourselves by making genuine cuts to improve how we spend our scarce tax dollars and to combine that with sound development and increased revenue.
Anything else is just a shell game. Three card monte, anyone?
Alan Sohn
Alan-
Totally agree..cut spending at the township level..then and only then can we see "real" tax cuts
Alan-
Isn't the percentage predicated on a mythical $6,000 tax bill that nobody i know in Teaneck is paying? You seem to be assuming the percentage will be on the real tax bills.
In fairness to Corzine, using half of that 1-point jump in the sales tax (a 16% percent increase) for "property tax relief" was forced on him by the legislature. He wanted to use the entire amount to help restore the missing peas from past shell games.
20% of $6,000 is $1,200, so if the examples given by The Record can be believed, it would seem that the tax credit percentage will be based on real tax bills. The Record article also suggests that the credit would appear on the actual real estate tax bill, not as a separate check from Santa Corzine.
I realize that these are details that don't really change the main point of Alan's post.
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