Property Tax Gimmicks - Lonegan is right!

A recent Christie add attempted to play the typical New Jersey entitlement card by attacking Steve Lonegan's tax plan. The comment in question was where Lonegan called the state's property tax rebate system a "gimmick". The joke here is that Christie's ad people have so little respect for New Jersey voters that they really expect people to get fired up over this. And they are probably correct. New Jersey's voters frankly so routinely vote against their own interests, they are only outdone by Michigan voters.

While you may not agree with Lonegan's tax proposals, he is absolutely correct about one thing. The property tax rebate program is a complete joke. It was instituted to provide political cover for weak politicians in both parties who didn't have the courage to deal with the issues behind property taxes spiralling out of control. It was then perpetuated as a give away program for people who didn't pay property taxes AT ALL. If that isn't a gimmick, I don't know what is.

And kudos for Lonegan for bringing it out. And shame on Christie for acting like a New Jersey Democrat. If you really want to change this state, bad policy like the rebate program need to be looked at seriously.

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Corzine Tax Increase on All of NJ

The Governor announced his budget plan yesterday. He made a point to be Obama'esque by citing the global economic condition rather than his own mismanagement for the poor state of NJ's economy. As a matter of fact, he tried to balance the "i inherited the problem (from his Democrat counterpart?) with the economic situation. He proudly spewed Obama by announcing tax increases on those making more than $500,000 per year as if everyone didn't expect there was more to his populist pap.

Well there was. He quietly announced a proposal to not only eliminate the rebate program for everyone but seniors thereby increasing taxes on most of the homeowners int he state, he also announced the elimination of the deduction for mortgage interest in income taxes. I caught this last night and alerted Jake but I didnt get a change to do the research before the folks at NJ.com did commenting on the budget.

That could translate into a double whammy for non-senior homeowners earning between $75,000 and $150,000. Not only would they lose their rebate, they would also miss out on hundreds of dollars in savings from the deduction.

A homeowner earning $95,000, for example, would not only lose a $1,000-plus rebate. Scrapping the property tax deduction would take away another $350 or so, according to state figures.

But that isnt all:

According to income tax data from 2006, the most recent available, there were 469,300 tax returns in the $80,000- to $150,000-income bracket. Those taxpayers had an average savings of $356 from the deduction. The average savings was $175 for the 258,500 tax returns in the $50,000 to $70,000 range.

The proposed budget would offer rebates averaging $900 for non-seniors earning less than $50,000 annually, and checks averaging $700 for non-seniors making between $50,000 and $75,000.

Last year, Corzine's budget included rebates averaging $665 for households earning $100,000 to $150,000. Households earning up to $100,000 received checks averaging $1,115.

So guess what all of you New Jersey resident who voted for hope and change and a new way of doing things? You voted for a middle class tax cut that apparently amounts to $13.00 per month for most people. Review this post and you will realize that thanks to your Obama loving Governor, you are already in the hole by quite a large margin. You thought it was the OTHER GUY who was going to be taxed.

You were wrong.

Read the entire article here.

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Will NJ Property Tax Rebates be cut?

This just in from Newsday:

Gov. Jon S. Corzine said Friday that he is considering suspending property tax rebates next year as New Jersey faces a multi billion dollar budget gap.

The governor said all options are on the table for his 2010 budget proposal, which he plans to present to state lawmakers on March 10. State budget makers are looking for ways to close an estimated $6 billion deficit. That figure doesn't include federal stimulus money the state expects for budgetary relief.

It was just a matter of time that the Governor would notice that the state cannot afford the homestead rebate program. Last year, he tried to take it away but only pared things back a bit:

New Jersey residents get about $1.7 billion in property tax rebates annually.

Some homeowners saw their rebate checks cut or canceled last year. Those making more than $150,000 got no rebate, and those earning $100,000 to $150,000 saw their rebates decline by an average of $295.

While he said he is considering suspending the property tax rebates for some or all homeowners, Corzine on Friday would make no promises or predictions about next year's budget.

My issue with this program starts with the entire concept. If rebates are needed because property taxes are too high, the state should actually look at why. They would find that the unfunded mandates from Trenton and the wasted suctioning of school funds from non-city school districts into the inner city has put too much of a strain on local municipalities. That in addition to the fact that the state frankly has too much government. Too much local government. Too much county government and too much state government. I have mentioned before in this blog that I have lived in several states and New Jersey extracts more money for the least services of any state that I have lived.

So the underlying motivation for the rebate is to ignore the fundamental problem and patch it by sending out checks to homeowners. This is a kick the can strategy that does nothing to solve the problem, just postpones it to another day. And if that were the only issue with the rebate it would be bad, and irresponsible of our politicians and a demonstration of sheer government incompetence, but it would at least be understandable.

There is a built in bias in the rebate system against people who actually pay taxes in our state. This program has morphed into a giveaway program designed to put out checks ahead of elections to Democratic constituencies. This program provides checks to citizens that DO NOT EVEN PAY PROPERTY TAX. And it has continued to exclude the highest property tax contributors in the state due to income. Sort of a double progressive tax (you pay more for your taxes on income and then pay more for your property tax).

Now, I have heard from people who make the case that property taxes are built into rents but most studies will tell you that the market and location determines rental prices. Frankly, if you are going to make the indirect argument, retail shoppers pay a higher premium on property taxes as local prices for goods sold in retails shops are much more sensitive to property tax costs than rental units.

But the main point is that this program is no longer affordable. My suggestion would be to look closely at the Senior citizens impact and retain the program for SENIORS WHO PAY PROPERTY TAXES. They are often impacted severely for growth in their community. For seniors who rent, no rebate.

It's time for the adults in the room to eliminate their political pay-for-vote schemes and look toward helping New Jersey come out of this fiscal situation a stronger and more vibrant state. The alternative is that we can become Michigan. And that is not a pretty sight.

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