Time to Focus on Local Taxes

Trenton’s Take is Too Large But Local Levies Deserve Greater Taxpayer Scrutiny

By Scott Alexander | The Save Jersey Blog

Cap 2.5 LindenLike the citizens of most states, New Jersey residents pay municipal, school, county, sales and income taxes. Seven don’t have income taxes and five don’t collect sales tax. Local taxes (municipal, local and county) account for 57% New Jersey’s aggregated consumer annual tax bill. 

New Jersey takes 43%, which is good news, since on average, American states that collect an income taxes take 60%. In fact, we are the second lowest state in this metric out of all states who collect an income tax.

What that tells us is that our local taxes are out of whack. Not that we don’t need to lower state taxes, Save Jerseyans, but local taxes exact a much bigger impact on our local economies. In 2013, local governments will spend $23 billion. 

Governor Chris Christie proposed the tool kit in 2010 which included pension reform and the 2% cap (originally a 2.5% cap) among other tools. These tools have helped to slow the rate of growth of local taxes, resulting in over $1 billion in combined local tax savings in 2011 and 2012 alone. And in 2013, they’ll add another $500 million to the savings column. But our Democrat-controlled legislators have pushed-back against all but six of the tool proposals and, as mentioned above, insisted on a legislative 2% cap instead of a constitutional 2.5% cap.

Governor Christie boldly proposed a tax reduction in 2012 but received no support from legislators. Yesterday, Governor Chris Christie proposed a budget with no tax increases but also manages to provide substantial tax relief for small businesses, an element which I can only hope moves quickly towards approval. Having said that, we still need broader-based tax reform in order to become a more competitive state.

Our legislators need to do more at the local level specifically to find more savings not by dictating unrealistic laws but by making real-world implementable laws based on expense reduction and revenue enhancement. Furthermore, they need to focus on our counties and their $7 billion of annual spending and $12 billion of debt. The reason for doing so is simple: tax savings at the local level will open up pocketbooks for local spending and will support our small businesses and the economy. That helps everyone in the Garden State!

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