NJ Tax Revolution

Do You Know Where The Money Comes From?

Posted on 29 April 2010

If this sounds a little like I wrote it to a local email list, it’s because I did.

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I’d like to reflect on where we get the money we spend on education.

The “average taxpaying household” pays property taxes of about $12K per year.

If that household has an average child in the school system, that child costs the town about $15K per year just for education. (The BOE at the Council meeting said that was about right, maybe a little less, but little differences don’t matter for the argument. Also note that I’m only including the direct cost to West Orange through property taxes, not the money that we pay to the state so they can fund teachers’ Social Security and pensions.)

Thus a family with one general education student (cost: $15K) pays for part of that child’s education with its property taxes (tax: $12K). The town – other taxpayers, that is – subsidizes $3000 of that child’s education, plus all other services for that family while that child is in school. The town loses money on that family.

If a family has two children, two grades apart, that family consumes $192,000 more – in education costs alone – over the course of 14 years. (The math is at the end of the post.) It goes up with each additional child.

This implies to me that we should forbid any inbound immigration of Catholics, Mormons, Orthodox Jews, Muslims, Hispanics, or other populations with historically large families. Moreover, for large families that already live here, we will cut our losses if we offer a program that pays them $50K per family to leave. I love West Orange’s diversity, but not at that price!

Yes, I’m kidding. The point isn’t that we should hate people who have families, or that we should go to a one-child-per-family policy. The point is that we, as a vibrant community, want far more for our families than those households can contribute during those burgeoning-family years.

That implies, to me, a variety of important things:

• We should not make the property tax burden big enough that older families leave. If a family has two children, and the town loses $192,000 to them over 14 years, the parents need to stay in West Orange for an additional 16 years to make up the difference. (That is a statement about our finances, not about their obligations.) We want them to love the community and find it affordable to live in. If they decide to move into a smaller house, we want them to stay in town. Heck, we want them to tell their middle-aged and retired friends that they should move here, too. (Future slogan: “West Orange: Great for Grannies!”)
• We want the children of those older families to raise their families here, too. We want unmarried people and young couples to buy houses here before they have children, so that they start paying their part into the community up front.
• We should not make the burden so big that the rich leave. While we shouldn’t let the rich walk on us, we should not demonize them, either. Hate John Schmidt if you must, but his $30,000 annual tax burden covers the cost of two children every year. The average taxpayer’s burden covers less than one.
• We should want thriving businesses in West Orange. That doesn’t mean industry – I don’t really want that – but it does mean everything from supporting Bill down at the Ital-Mart Deli to shopping at Essex Green and the local Kmart. And it certainly means creating a tax environment that makes it possible for them to do well for themselves while doing good things for us.

In short, we literally can’t afford to make West Orange hostile to any of these people.

To understand our responsibility to them, and to our town, it’s critical that those of us with children in the schools should recognize that these people are subsidizing us.

That crystallizes things for me, and I’d like to address those of you who, like me, have one or more children in the public school system.

There has been talk recently about “pay-to-play” – in order to play the cello or soccer or what-have-you, the parents would need to kick in the money to fund the program. Several people said, “What about the poor people down the block who can’t afford it? Aren’t we supposed to provide everyone an equal opportunity?” But we’re not even paying for our own kids to play the cello. If you pay average property taxes and have three children in public school, then even if we doubled your taxes you wouldn’t even come close to paying for the full amount that the town spends on your kids. A request to pay for the poor people down the block is a request for more of our neighbors’ money.

And not the neighbors that you’re closest to, either. If you’re like my family, you probably hang out with other families with kids. Most of those kids are probably going to public school. Those families are contributing to our town’s deficit, just like we are.

We’re asking for more money from the retired couple down the street living on a fixed income, from the widow two streets over, from the struggling business on main street, from the family who’s trying to pay for college for their youngest daughter. And, yes, the banker in Llewellyn Park, too. We’re asking for money from people with whom we may not even have a relationship.

No, not asking: that sounds like we’re going door-to-door with a smile and an envelope. When we raise taxes, we are demanding more money, with threats of foreclosure for those who refuse.

We shouldn’t be surprised if that angers our neighbors, or makes them want to leave. It’s our attitude that needs adjusting, not theirs.

When we ask, not just that they continue to pay, but that they continue to pay more and more every year, during the worst economy in decades, we sound like self-centered fools. Just as I’ve said the teachers’ union should agree to a pay freeze, we middle-of-the-road families need to take one, too – a cut, even. I frequently dislike Hugh’s attitude and comments on the Watercooler, but when he says he’s struggling to make ends meet, it’s damned arrogant and insensitive to not recognize the validity of his perspective. When he says kids should pay extra to play the tuba, that’s because if the parents don’t, then he does.

This isn’t just a present concern. If we love West Orange, we should want to keep costs low now and into the future, because that’s the only way that West Orange will continue to be able to subsidize families like ours. If we are not modest in our aims now, we will drive out the very people who would continue to make this community what it is. We even make it unlikely that we ourselves will be able to stay as we age.

And that brings me to my last point: These aren’t just economic facts. These are things that we should want just from our sense of community. I want to love West Orange enough to stay when my kids are grown, and to be able to afford it when the time comes. I’m nowhere near in danger of living in Llewellyn Park or paying the so-called Millionaire’s Tax, but I want to get rich and to live in West Orange. I want my kids to consider settling in West Orange when their time comes. I want to be a living part of a thriving community.

Increased taxation will not help that cause.

Adding a “millionaire’s tax” will not help that cause.

Additional bonds will not help that cause.

Complaining about the overturned school budget will not help that cause.

Jealousy toward the rich will not help that cause.

If we want a thriving West Orange, we need to be affordable. Not just to families with school-aged children, either; it’s at least as important to be affordable and friendly to the rich, to young college graduates, to empty-nesters, and to retirees.

We are in the thick of the worst fiscal crisis most of us can expect to see in our lifetimes. Let’s stop being jealous. Let’s stop expecting everything we could possibly want. Let’s work together to find ways to live through the crisis, become affordable again, and be accountable to our neighbors for our costs, our behavior, and our attitudes.

I hope for a strong future for our town. I hope you do as well.

Regards,
Jake Freivald
Ridgeview Ave
West Orange, NJ

P.S. Math: For two years, only the oldest child is in school, so the education cost ($15K), and the tax amount ($12K) needs to be supplemented by the town ($3K).

Then the younger child enters the system, and for the following 10 years, there are two children in school, at a cost of $30K annually. Taxes collected per year are still $12K. The difference, $18K, has to be picked up by the town for those 10 years.

Then the older child graduates, and for two more years we need a supplement by the town again for $3K per year.

(2 years * $3K / year) + (10 years * $18K / year) + (2 years * $3K / year) = $192,000.