Nobody likes a tax hike. It especially hurts when you’re already tops for taxes in the nation. New Jersey, which holds the distinction of having the highest tax burden in the nation for three years running, has been pushing back at a budget with increases that Governor Christie (R) insists are necessary. This week, the state assembly voted 73-4 to cap property tax increases at just 2% annually. The governor is expected to sign the bill into law today.
Under current law, property taxes may be increased as much as 4% per year with several exceptions. Gov. Christie suggested scaling back the exemptions but capping the increases at 2.5% (he also suggested making the increases part of a constitutional amendment which could be changed only by voters, not by statute). The final bill is a cap of a 2% increase each year with several exemptions. Any town can push the cap up with a simple majority vote.
The cap is said to be similar to that in Massachusetts, which like New Jersey, has set atop the list of states with the highest property taxes. Like Massachusetts, New Jersey residents enjoy a high level of services compared to many other states with lower property tax burdens – a key “perk” being a high-achieving school system. Now, however, with the cap, many Massachusetts residents feel that they’ve simply swapped a higher tax burden for a lower tax burden with add-ons: residents now pay separate fees for certain services. That’s not so great since those extra fees are still out of pocket but tend not to be deductible. In Philadelphia, many residents balked at a separate residential trash fee, preferring to have it added on to their property tax bill. Swapping out a tax increase for a non-deductible fee doesn’t necessarily feel like a win to many.
New Jersey, however, is apparently chalking this one up as a victory. Will it make a real difference in their overall tax burden? Those involved with the bill say yes. The bigger question may be: will it be enough?
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