Dangers of Holding a Property Tax Convention

  • Fundamental Fairness and Justice in Tax Collection Ignored
    Based on the present failure of leadership on all sides to realize nor acknowledge that the Property Tax is an inherently unjust way of collecting taxes the entire point of a convention could be missed.
    There is an historic opportunity to address this situation. But holding a convention which is portrayed as the panacea for fixing the Property Tax problem when it actually fails to even discuss whether it is fundamentally fair and just would mean it was a monumental failure.

    It is only because property taxes have risen to affect those in the middle clase that it has come to the fore as a problem. Unfortunately, the focus of all discussion is misplaced. It has to do with everything but what is painfully clear to those most oppressed by the Property Tax.

    This tax is skewed against low, no, and middle income taxpayers. To fail to even discuss whether it should be retained as a tax at all would be a tragedy.

  • The scope of the reforms might be limited.
    Nothing would be worse than to have a result similar to Michigan’s, wherein the local property tax was abolished only to be replaced with a state property tax. What’s the difference? A rose is a rose, especially the quacking type.
  • The focus of the Convention is solely controlling spending in general
    The issue is fairness.
    The mission will be a failure if dealing with spending issues is confused with addressing the fairness issue. The present system disproportionately burdens low, no and middle income taxpayers. That is, they are subsidizing the property taxes of higher income earners. Put another way, higher income earners are not paying their fair share. Focusing on ancillary issues—which need to be addressed separately—will only increase this historic opportunity to reverse tax fairness in a meaningful and substantial way.
  • Misplaced focus on education funding.
    Education is a target because it consumes 60+% of most property tax bills. Property taxes have been under fire for decades. Did you know that the dollar total today for municipal and county taxes is more than the amount for education was just ten years ago?
    The point is that government spending in all areas drives property taxes higher. Addressing just one cause will not address the fundamental issues. Elimination of the Property Tax will force all areas of runaway government spending to be addressed. That is because then it can no longer be relied upon to automatically go up to cover increased spending anywhere in government, not just on education.

    And who is to say that once the education portion is eliminated that politicians won’t feel free to loosen the reins on spending for municipal and county budgets. Likewise Trenton will continue with more unfunded and under-funded mandates. There will be nothing to stop them from once again relying upon the Property Tax to absorb spending in these areas.

  • The convention might be packed with cronies of politicians and special interests.
    Who really has the money to run a campaign for election as a delegate to the Convention? Possibly, there are a few principled and well-intentioned private citizens who do. But economic powerhouses such as the N.J. Education Association, government employee unions, developers and trade unions certainly do. It is unlikely that ordinary citizens have the time or money to devote to this matter that affects them more directly than anyone else.
    Does anyone believe the teacher unions do not want to lose the golden goose of forced property tax increases? It is how they pay for multiyear contractual obligations incurred by school boards. This is because they are seasoned veterans at rolling local boards of education time after time when they negotiate new contracts. In the fifteen years I have monitored contract agreements, there has never been one that has been less than one to two percent over inflation. I have even seen multiyear more than double inflation raises. When combined with state imposed spending caps, the rest of the school operation suffers. But altruism is not a guiding principle of the NJEA, nor is their motto a square deal for the taxpayer. Their worry about a Convention is they will end becoming subject to the will of politicians who have re-election in mind when it comes to contract settlements.

    Teacher unions are not the only vested interest. Developers and builders need the lure of increased property tax income to municipalities through redevelopment. This is one of the major drivers of the rampant use of eminent domain. Take away the need to increase revenues and you have a great disincentive for town leaders to cave into the pressures of developers. That is because there will be no benefit due to increased property tax income.

  • Spending will be relied upon to achieve a perceived but short lived solution.Spending must not be relied upon to achieve fairness with the Property Tax. Reduced spending is the fiduciary responsibility of legislators no matter how taxes are collected. Is it only because property taxes have become oppressive that spending control is important? Or should spending always be under scrutiny?

    If reduced spending is counted upon as fundamental to the solution, you can bank on real improvement never occurring. WARNING – do not mistake frozen spending levels for reduction. This is the politicians preferred smoke screen solution. If spending freezes do not occur, the whole process will need to begin again. Even if freezes did occur, they will not last forever.

    Additionally, property taxes have been too high for two decades. At that time they were about 30% of what they are today. There is no way there is enough savings to be found to get even half way to that figure. And, as has been repeatedly pointed out, the inherent fairness is there no matter how high or low the actual property tax is. low, middle and no income taxpayers pay a greater share than those in upper income brackets.

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