Why New Jersey Is Still No. 1 for Property Taxes


If there is one thing that unifies residents of New Jersey, particularly in these divisive times, it's property taxes: Everybody hates them.

One of the Garden State's chief claims to fame -- besides The Sopranos and The Boss -- is the fact that its residents pay the highest property taxes in the country. A recent study from the Tax Foundation confirmed this yet again, finding that New Jerseyeans paid median taxes of $6,579 in 2009. Seven out of the nation's top 10 counties for property taxes are in New Jersey. This infuriates residents and is a regular topic on talk radio. It should be no surprise that property tax appeals are up 44% in the state, according to the Newark Star-Ledger

Fixing the state's property tax system is one of the top priorities of Gov. Chris Christie, who defeated incumbent Jon Corzine because of widespread dissatisfaction over the hated levy. He is now a rising star in the Republican party who spearheaded legislation to cap property tax increases at 2%. Earlier, this year, Christie slashed the state's contribution to education by $820 million to ease the burden on property taxpayers, which prompted a showdown with the New Jersey Education Association, the state's largest teachers union.

"People have an emotional reaction to it," says Deborah Howlett, president of the Trenton-based think tank New Jersey Policy Perspectives, which is often critical of Christie, in an interview . "It's understandable ... [but] New Jersey is almost completely reliant on property taxes to fund local schools and government."

In the Garden State, All the Taxes Are High

Other states, including some near the top of the high property tax list, permit local governments to levy their own sales and income taxes. New Hampshire and Connecticut, both high property tax states, also don't allow local sales taxes.

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"Looking at property tax alone does not tell one much of anything," says Iris Lav, a senior adviser at the left-leaning Center for Budget and Policy Priorities, in an email. "People in jurisdictions that have local sales taxes do not necessarily pay less tax because their property taxes are lower; they may just pay the taxes in another form."

William Ahern, spokesman for the Tax Foundation, rejects this argument, noting that New Jersey's other taxes are high as well. "New Jersey really has no excuse," he says. Residents shell out 11.8% of their incomes on state and local taxes, the highest state and local tax burden in the country, according to the Tax Foundation, well above the national average of 9.7%. The figure also includes taxes that residents who commute pay to states such as New York.

New Jersey residents also pay high fees, high tolls and high car insurance rates The state has 566 municipalities with more than 560 mayors and 13,000 elected and appointed officials, according to the New Jersey League of Municipalities. New Jersey's 588 school districts employ about 200,000 people. Officials have argued for years that small towns and school districts should merge, although there is debate about whether consolidation would save money.

A Bipartisan Loathing for the Levy

Like the other high property tax states, New Jersey residents voted backed Barack Obama for president in 2008 over his Republican rival John McCain. The reverse holds true for the low tax states, which supported McCain. Politics does not tell the whole story, however: Officials everywhere from both parties regularly vow to hold the line on the hated tax.

In California, property tax increases have been severely limited by Proposition 13, which was passed in 1978. Some officials say the law is at least partly to blame for California's current budget crisis because it made the state overly reliant on the income tax. The issue is being debated in local races ranging from the mayor's office in Orlando to governors races in Connecticut and Iowa

"This autumn, as Iowa homeowners and businesses open their property tax statements, they will be reminded of the state's increasing reliance on those taxes," writes Ed Wallace of the Iowa Taxpayers Association in theDes Moines Register. "Sticker shock has arrived and hardworking Iowans can't keep paying the bill."

According to the Tax Foundation, the top states for states for median real estate taxes in 2009 besides New Jersey were; Connecticut ($4,738); New Hampshire ($4,636); New York ($3,755); Rhode Island ($3,618); Massachusetts ($3,511); Illinois ($3,507); Vermont ($3,444); Wisconsin ($3,007); and California ($2,893). The bottom five were South Carolina ($689), Arkansas ($532), Mississippi ($508), West Virginia ($464), Alabama ($398) and Louisiana ($243). The data comes from the Census Bureau.