Why Are Our Property Taxes So Damn High?

bigorangesplotmpwd

When asked the question people mostly mumble things like “Newark” or “Irvington” but that leaves me unconvinced. Anyone out there have a solid, simple and backed up with data reason as to why we pay such damn high taxes?  I feel I may be able to stomach it more easily if I actually understood it. 


Red_Barchetta

Are you talking about property taxes?  If so it’s not about Newark or Irvington.  Well perhaps a little if you consider these neighboring towns a driving factor in our police force.  


School system is main driver, perhaps 60% of your property tax bill.  We get very little aid from the state for our school system.  Secondly we have very little in terms of commercial ratables.   In other words, the vast majority of the property in our town(s) are residences.  This matters because more houses GENERALLY means more students.  If we had a shopping mall, corporate park, office buildings, etc... that would be real estate that paid into the system but did not burden it with students.  


sprout

Think of it this way:

If your taxes are $20k/year, and 60% goes to school budget. That means $12k/year of your property tax burden is going to the school budget. 

The cost per pupil for SOMSD was $19,413k/year (Average as per 2015-16 school year: https://www.nj.com/education/2017/04/how_much_new_jersey_schools_spend_per_student.html )

So, if you have two kids in the schools, you are only paying $6k/year towards each of their $19,413k/year educations.



drummerboy

your taxes are too high because the very wealthy don't pay enough. (both Fed and State)


next question.


ml1

personally, I wouldn't crowd source this question. I'd go online and do some research. It's not hard to find the real answer. 

Unless one is just venting and asking the question rhetorically. Then this would be a perfect venue. 


yahooyahoo

Newark gets nearly a billion dollars a year from the state in school funding. So yes, Newark is part of the answer.


librarylady

NO Short Hills Mall

NO Corporate Park

NO commercial centers

LOTS  of tax-exempt religious/educational properties


cramer

What Red_Barchetta said, plus in South Orange SHU doesn't pay any PILOT for its main campus. South Orange provides police and fire services to the main campus. 


annielou

Also I’m sure many potential home buyers know that SO taxes are much higher than Maplewood’s because of inequities in school funding. It’s an outrage and unsustainable for anyone wanting to live in SO beyond their children’s school years. When questioned about this we’re directed to our legislators who won’t do anything anyway. Personally it is of little interest to live in a so called “liberal” town where only wealthy liberals can reside.


Red_Barchetta
annielou said:
Also I’m sure many potential home buyers know that SO taxes are much higher than Maplewood’s because of inequities in school funding. 

There is less than a kernel of truth to this assertion.   And its kind of like saying sugar is sweet because it comes from cake.  


bigorangesplotmpwd

Are there other NJ towns who have low commercial ratables and similar cost per pupil school funding who have substantially lower property taxes?  If so, how come?  


sprout

Taxes are only $9,000 per year on this gorgeous 6BR 3.5BA $500k home in Newark:

https://www.realtor.com/realestateandhomes-detail/501-Highland-Ave_Newark_NJ_07104_M59281-19002

And only 2 miles from the Newark Broad street station for an easy commute to NYC.


ETA: The result of the low taxes is that much is underfunded: E.g., The police are underfunded, and do not come when you call. The libraries are underfunded and are often closed. And the schools are underfunded (however, the state does contribute to this, and the spending averaged ~$22k per pupil)


FilmCarp

that number seems low, even for Newark.  I own a property valued around 250k in the South Ward and the taxes are 6k plus a little.  


yahooyahoo
sprout said:
Taxes are only $9,000 per year on this gorgeous 6BR 3.5BA $500k home in Newark:
https://www.realtor.com/realestateandhomes-detail/501-Highland-Ave_Newark_NJ_07104_M59281-19002

And only 2 miles from the Newark Broad street station for an easy commute to NYC.


ETA: The result of the low taxes is that much is underfunded: E.g., The police are underfunded, and do not come when you call. The libraries are underfunded and are often closed. And the schools are underfunded (however, the state does contribute to this, and the spending averaged ~$22k per pupil)

The schools in Newark are well funded thanks to the state of NJ.  They spend more per student than towns like Millburn, Maplewood-South Orange, Cedar Grove, Livingston, Montclair, etc.

Unless you are arguing that all school in NJ are underfunded?


Runner_Guy
sprout said:
Taxes are only $9,000 per year on this gorgeous 6BR 3.5BA $500k home in Newark:
https://www.realtor.com/realestateandhomes-detail/501-Highland-Ave_Newark_NJ_07104_M59281-19002

And only 2 miles from the Newark Broad street station for an easy commute to NYC.

ETA: The result of the low taxes is that much is underfunded: E.g., The police are underfunded, and do not come when you call. The libraries are underfunded and are often closed. And the schools are underfunded (however, the state does contribute to this, and the spending averaged ~$22k per pupil)

 That house must be underassessed, because Newark's all-in tax rate 3.031, which is just slightly lower than SO's and Mpwd's.  In Newark's next reval, that house's property taxes ought to increase.

is https://www.state.nj.us/treasury/taxation/pdf/lpt/gtr/Essex17.pdf


Runner_Guy

I don't fully agree with the premise of this thread.  SOMA has a tax rate of about 3%, which is sky-high by national standards, but it is only in NJ's top-quarter.  

I disagree with the statement that being in Essex County is to blame.  If you compare county tax rates, Essex County's taxes are 0.49, which is the state median.  

(Aknowledged: this isn't a perfect apples-to-apples comparison because some other counties do provide more services than Essex)

https://www.state.nj.us/dca/divisions/dlgs/resources/property_tax.html#1

Essex County towns do tend to have higher than average taxes, but it is because of school and municipal taxes, not county taxes themselves.  So, as a geographic descriptor you can say "Essex County has high taxes," but it isn't the county government's fault per se.  

If you want to answer the question of why our taxes are so high compared to other states, then the answer is because our local government spending is exceptionally high, with K-12 school spending usually ranked 3rd in the US and PreK spending (I presume) being #1.

 Many people say and imply that NJ's income taxes are too low, but NJ's income taxes are only low in comparison to property taxes.  In dollars per capita, NJ's income tax brings in the 6th most in the US.


sprout
yahooyahoo said:


sprout said:
Taxes are only $9,000 per year on this gorgeous 6BR 3.5BA $500k home in Newark:
https://www.realtor.com/realestateandhomes-detail/501-Highland-Ave_Newark_NJ_07104_M59281-19002

And only 2 miles from the Newark Broad street station for an easy commute to NYC.


ETA: The result of the low taxes is that much is underfunded: E.g., The police are underfunded, and do not come when you call. The libraries are underfunded and are often closed. And the schools are underfunded (however, the state does contribute to this, and the spending averaged ~$22k per pupil)
The schools in Newark are well funded thanks to the state of NJ.  They spend more per student than towns like Millburn, Maplewood-South Orange, Cedar Grove, Livingston, Montclair, etc.
Unless you are arguing that all school in NJ are underfunded?

I'm arguing that the *Newark property tax base* does not independently fund the schools (i.e., part of why their property taxes are lower). Newark makes up the difference in per-pupil spending from the additional state funding. 

In other words, SOMA taxes are relatively higher because we spend more -- in order to more independently (in the case of schools), and more fully (in the case of police, libraries, etc) fund town services.


sprout
Runner_Guy said:


sprout said:
Taxes are only $9,000 per year on this gorgeous 6BR 3.5BA $500k home in Newark:
https://www.realtor.com/realestateandhomes-detail/501-Highland-Ave_Newark_NJ_07104_M59281-19002

And only 2 miles from the Newark Broad street station for an easy commute to NYC.

ETA: The result of the low taxes is that much is underfunded: E.g., The police are underfunded, and do not come when you call. The libraries are underfunded and are often closed. And the schools are underfunded (however, the state does contribute to this, and the spending averaged ~$22k per pupil)
 That house must be underassessed, because Newark's all-in tax rate 3.031, which is just slightly lower than SO's and Mpwd's.  In Newark's next reval, that house's property taxes ought to increase.
is https://www.state.nj.us/treasury/taxation/pdf/lpt/gtr/Essex17.pdf

Yes -- If it were assessed at $500k, then at 3.031%, it would increase to $15k.  

(Are you sure that's the tax rate, and it's not actually higher? The property info indicates that the home is currently assessed at $250k -- which would only result in $7,600 for property taxes at 3.031%, not the $9k taxes in the info.). 

-----------

(ETA: Also -- if tax rates are similar, then an additional answer to the OPs question is that taxes are higher in SOMA because properties in SOMA are "worth" more than similar properties in Newark.)



joan_crystal
annielou said:
Also I’m sure many potential home buyers know that SO taxes are much higher than Maplewood’s because of inequities in school funding. It’s an outrage and unsustainable for anyone wanting to live in SO beyond their children’s school years. When questioned about this we’re directed to our legislators who won’t do anything anyway. Personally it is of little interest to live in a so called “liberal” town where only wealthy liberals can reside.

Maplewood and South Orange recently had a real property reassessment done at the same time by the came firm to address the question of whether South Orange real property owners should continue to pay slightly more towards the school district than Maplewood real property owners do.  The results came back with the proportion of school support from each town largely unchanged.  The reason for this apparent discrepancy is that real property values in the aggregate in South Orange are somewhat higher than real property values in the aggregatein Maplewood.  Calculations were based on objective criteria applied uniformly to all properties in both towns by the same company.  Legislative issue can and should be directed towards underfunding of our school district by the State.  Not to perceived inequities on how Maplewood and South Orange contribute to the school district.


bigorangesplotmpwd

Naive to think there would be a simple answer, but bummed there isn’t even some type of consensus. Or maybe I’m just not smart enough to understand many of the responses. I do know that there is not one single person outside of our region I’ve mentioned my property taxes to without that look of shock coming over their faces. You know the one. 


If it’s so damn complicated to understand perhaps there is something more going on. Corruption? Fraud?  Umm. 


joan_crystal
bigorangesplotmpwd said:
Are there other NJ towns who have low commercial ratables and similar cost per pupil school funding who have substantially lower property taxes?  If so, how come?  

They have fewer school aged children in the school system, they have a higher proportion of empty nesters, and/or provide fewer municipal services than we have here.


yahooyahoo
sprout said:


yahooyahoo said:



sprout said:
Taxes are only $9,000 per year on this gorgeous 6BR 3.5BA $500k home in Newark:
https://www.realtor.com/realestateandhomes-detail/501-Highland-Ave_Newark_NJ_07104_M59281-19002

And only 2 miles from the Newark Broad street station for an easy commute to NYC.


ETA: The result of the low taxes is that much is underfunded: E.g., The police are underfunded, and do not come when you call. The libraries are underfunded and are often closed. And the schools are underfunded (however, the state does contribute to this, and the spending averaged ~$22k per pupil)
The schools in Newark are well funded thanks to the state of NJ.  They spend more per student than towns like Millburn, Maplewood-South Orange, Cedar Grove, Livingston, Montclair, etc.
Unless you are arguing that all school in NJ are underfunded?
I'm arguing that the *Newark property tax base* does not independently fund the schools (i.e., part of why their property taxes are lower). Newark makes up the difference in per-pupil spending from the additional state funding. 
In other words, SOMA taxes are relatively higher because we spend more -- in order to more independently (in the case of schools), and more fully (in the case of police, libraries, etc) fund town services.

 I agree with that.


FilmCarp


If it’s so damn complicated to understand perhaps there is something more going on. Corruption? Fraud?  Umm. 

 This is the worst possible takeaway from this discussion.  Too many people make these accusations when something is hard to figure out.  

 There are a lot of contributing factors when it comes to our taxes.  They should all be examined, certainly, but may not be easily changed.



Tom_Reingold

Digging into my unreliable memory, I recall that Governor Jim Florio raised income taxes and made many people angry. He was voted out. The slogan was "Florio Free in '93." Governor Christie Whitman reduced income tax, leaving school districts and municipalities to replace the money they used to get from the state by increasing property taxes. File this under Be careful what you ask for. Governor Jim McGreevey criticized school districts and municipalities that there were too many and that they should consolidate to reduce inefficiencies. One of the governors (or many several) imposed caps that restricted how much property taxes can increase a year, as if that's a solution to the problem, which it isn't.

Basically, as drummerboy said, the high earners don't pay enough. Property tax is pretty regressive, at least at their current levels. Those who could change this don't want to, because they are the people who would pay more.

There is a bit of good news, though. Maplewood and South Orange are good places to live, and the schools are good.

My spouse and I moved into Maplewood in 2003, and I gathered that taxes went up about 5% per year. That's doubling every 14 years. I figured we couldn't afford to stay more than ten years. That ended up being the exact length of our stay. This is a self-perpetuating problem where parents might even pay in less than they get out in school taxes, then move away. I'll bet the average income of residents is rising rapidly because of this turnover.


Runner_Guy
yahooyahoo said:


sprout said:

yahooyahoo said:



sprout said:
Taxes are only $9,000 per year on this gorgeous 6BR 3.5BA $500k home in Newark:
https://www.realtor.com/realestateandhomes-detail/501-Highland-Ave_Newark_NJ_07104_M59281-19002

And only 2 miles from the Newark Broad street station for an easy commute to NYC.


ETA: The result of the low taxes is that much is underfunded: E.g., The police are underfunded, and do not come when you call. The libraries are underfunded and are often closed. And the schools are underfunded (however, the state does contribute to this, and the spending averaged ~$22k per pupil)
The schools in Newark are well funded thanks to the state of NJ.  They spend more per student than towns like Millburn, Maplewood-South Orange, Cedar Grove, Livingston, Montclair, etc.
Unless you are arguing that all school in NJ are underfunded?
I'm arguing that the *Newark property tax base* does not independently fund the schools (i.e., part of why their property taxes are lower). Newark makes up the difference in per-pupil spending from the additional state funding. 
In other words, SOMA taxes are relatively higher because we spend more -- in order to more independently (in the case of schools), and more fully (in the case of police, libraries, etc) fund town services.
 I agree with that.

 Higher local spending is the reason NJ's property taxes are high in general.

I would simplify NJ's high taxes to this:

high compensation for public employees x high per capita staffing = high spending = high taxes

NJ's police are the second highest best paid in the US.  

We have 1 officer:263 residents.  the national average is 1:416.

NJ's average teacher salary is $69,330. the national average teacher salary is $59,660.

NJ's student:teacher ratio is 11.9:1.  The national student ratio is 16:1.

You might argue that NJ gets better services because we pay local employees better and have more of employees per capita, but if you want to understand why NJ's property taxes are so high, you can't omit compensation & staffing levels.  

------

I strongly disagree with the explanation that NJ's property taxes are high because of insufficient income, sales, or corporate taxes.  Although those taxes in NJ are overshadowed by NJ's property taxes, that doesn't mean they are low either in any kind of national comparison.  Saying that NJ's income tax is "low" would be like standing someone who is 6'4'' next to a 7' NBA player and then saying the guy who is 6'4'' is "short."



ctrzaska

Are those salaries equalized or flat?


Tom_Reingold

@Runner_Guy, those are good and useful numbers. They show how life in New Jersey is good by many measures. Schools are good, and I think salaries and staffing levels are two factors (among many others). Crime is low for the same reasons. You can live somewhere else more cheaply, but you don't get as much.


ml1
bigorangesplotmpwd said:
Naive to think there would be a simple answer, but bummed there isn’t even some type of consensus. Or maybe I’m just not smart enough to understand many of the responses. I do know that there is not one single person outside of our region I’ve mentioned my property taxes to without that look of shock coming over their faces. You know the one. 


If it’s so damn complicated to understand perhaps there is something more going on. Corruption? Fraud?  Umm. 

 as I mentioned earlier, why not do some actual study of this issue?  The information is available to any curious person with the google and a little patience.  It's a complicated issue, and the people who read this board aren't necessarily experts on all the complexities. So why would you expect a bunch of regular folks to have comprehensive answers to a very complex issue?

or did you just want to go through the motions of asking the question in order to eventually make an accusation of corruption?


Tom_Reingold

@ml1, there may be a subtle message in the wording of the question. Rather than ask "Why are our taxes at the current level?" or "Where do our tax dollars go?" the question asks why so damn high. It implies they are too high. So perhaps @bigorangesplotmpwd doesn't want an analytical answer?

Another question worth pondering is why the taxes increase at the rate they do.


Runner_Guy
Tom_Reingold said:
@Runner_Guy, those are good and useful numbers. They show how life in New Jersey is good by many measures. Schools are good, and I think salaries and staffing levels are two factors (among many others). Crime is low for the same reasons. You can live somewhere else more cheaply, but you don't get as much.

I think, at a fundamental level, the reason that NJ's property taxes are so high is because of voter behavior.

The Democrats are New Jersey's "natural party of government."  While the Republicans have certainly had their chances in the governorship over the last 40 years, Tom Kean and Christie Whitman were not fiscal conservatives, especially Kean.  I don't know what Donald DiFrancesco would purport to be ideologically, but he was corrupt and increased pensions by 9% (despite the bursting of the stock market bubble).  Christie tried to be a fiscal conservative (inconsistently), but he never had a majority on the Supreme Court or in the legislature.

While Jim Florio had had to say in his 1989 campaign, "I see no reason to raise taxes," by 2017 NJ was ready to elect someone as governor who barely purported to want to lower taxes, who promoted billions in new spending, and who constantly declared his love for public sector unions.  

Of course NJ has people who are livid about their taxes, but a whole lot of those people move to other states at the first chance they get, so there is a diminishing conservative electorate.  

I think if NJ had the ability to have citizen referenda I think we would have implemented something like Prop 2.5 in Massachusetts, but alas, we don't have that constitutional power and NJ's legislature has refused to give it to us.  



In order to add a comment – you must Join this community – Click here to do so.