Property Tax in New Jersey

~ Laura

Taxes in Jersey suck. They just do.

Walk into any diner on Route 17 and ask the guy at the counter. He’ll tell you, “our houses cost a lot, and we pay a shit load of taxes. Now get me a egg, cheese and Taylor ham sandwich, dammit.”

Here in Jersey, we are going to get royally screwed with Trump’s new tax plan. We used to be able to deduct part of the giant-assed local taxes from our federal taxes. Can’t do that anymore. Am I slightly laughing at the Trump voters in New Jersey right now? No. Because I’m too pissed off at them.

The towns directly around us are considering a plan to convert taxes into charitable donations, which still can be deducted from federal taxes. Our town must be considering the same plan.

Published by Laura

22 thoughts on “Property Tax in New Jersey”

  1. As near as I can tell (i.e. I did not do the actual math), I should come out financially ahead from the new tax plan, at least until the tossing grenades into the funding for health care means I can’t find work*. You’d need close to a half million dollar house here to hit $10,000 in property taxes and that’s maybe 5% of the houses in my neighborhood.

    * I think I would be able to find work because it turns out that fucking with the health insurance system means health insurance companies need more analysts, but I’d rather stick with something that might plausibly improve care for somebody as opposed to helping an insurer set up a plan to exclude the most sick people.

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  2. Laura said:

    “The towns directly around us are considering a plan to convert taxes into charitable donations, which still can be deducted from federal taxes.”

    That sounds shady (and probably illegal) if it’s not voluntary.

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  3. The Tax Foundation has an analysis of such plans: https://taxfoundation.org/state-strategies-preserve-state-and-local-tax-deduction/

    I’d think the need for there to be a charitable impulse behind a donation, without personal gain, would make it a legal non-starter to try to make taxes into donations. If I were a town, I’d also be very leery of freeing people from the legal obligation to pay property taxes. I’d assume the legal bills for the test case would also be significant.

    But, for a lot of New Jersey taxpayers with property taxes high enough to make a difference, aren’t they also likely to have been hit by the AMT? So they weren’t really getting the SALT tax deductions before 2018, as they’d be paying the higher of the two plans, i.e., without AMT vs. with AMT. See: https://taxfoundation.org/state-and-local-tax-deduction-amt-pease/

    Of course, the 5% of high-earners nationally represent a much larger percentage of the pool in high-tax states near New York.

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    1. “I long for the day when we have to run bake sales to raise money for bombs”
      “It will be a great day when our schools get all the money they need and the air force has to hold a bake sale to buy a bomber” has been a popular bumper sticker. The origin of the saying is unknown.

      Terry Herndon, executive secretary of the National Education Association, said in 1973, “I look forward to the day when the schools automatically receive the funds they need and the Pentagon holds bake sales to buy tanks.”

      I have my doubts, too!

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  4. The state and local taxes cap will hit us, but will probably be a wash with the change in the tax brackets.

    Private schools have tried for a while to take advantage of the tax break for charitable contributions by relying on fundraising to cover part of their operating costs. During the last recession, I remember an admissions director from one of the schools writing an op ed piece arguing that the schools should start pointing out the “recommended” (but really required) contribution when they described the financial costs (one got the impression of someone suddenly having to face a needed portion of the revenue source drying u).

    The ideas I’m seeing out on the internet, exchanging tax credits for charitable contributions seems impossible on its face (especially if they are one for one). But, potentially raising charitable funds through “recommended” contributions might be an option in some smaller communities.

    I wonder if an option where the tax rate goes down for everyone if enough money is raised in charitable contributions might fly (especially given that I don’t think the IRS is going to have the capacity for aggressive enforcement). The scheme would be kind of like shaving days off of public radio fundraising, but with shaving dollars off taxes. The payback couldn’t be direct (i.e. my property taxes get reduced because I made a contribution), but if the city raised 1M, they could shave the tax rate off of everyone’s taxes. In smaller communities, people might be able to use peer pressure (maybe print lists of those who have made their “recommended” contribution?) + good will to deal with the free loader issues.

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  5. Over at Instapundit: “LIBERAL DEMS TRYING TO PROTECT TAX BREAK FOR THEIR WEALTHY DONORS: Yes, it’s probably all but impossible to believe but liberal Democrats in big blue states like California and New York are feverishly seeking ways around the recently enacted tax reform measure’s cap on the deduction for state and local taxes (SALT). It turns out, according to LifeZette’s Brendan Kirby, that the biggest beneficiaries of SALT are wealthy tax filers with big mortgages and other properties, plus high individual rates. And in a Blue State, those filers tend to be donors to liberal Democrats. Purely coincidental, right?”

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    1. It’s more a measure of real estate costs, and the cost of living. Many people in our area of the state have large mortgages, out of whack with current income. There are people who are paying more than they’d like for housing, in order to access the good school systems and reasonable commuting time to the city. There is definitely a slice of the public who rely on the SALT deductions to make things balance. Provisions that are reasonable for the rest of the country don’t necessarily work for people on the coasts.

      I know a fair number of our contemporaries in this town have already sold their houses and moved out; those who are old enough to retire have moved out of state, to lower cost states. It’s expensive to remain in this state.

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    2. “the biggest beneficiaries of SALT are wealthy tax filers with big mortgages and other properties, plus high individual rates. And in a Blue State, those filers tend to be donors to liberal Democrats. Purely coincidental, right?”

      Explain that to my part-time (because of health issues) pre-K teacher sister and my retired NYPD BIL.

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      1. And, Wendy, will your sis/BIL get hit by being over 10K? There’s been a whole lot of down-the-road can-kicking by electeds in the states in which SALT is very high, remarkably generous pension plans, failure to control costs on public works projects. If this produces more … scrutiny … for public expenditures, do you think that’s not a good thing?

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      3. “want to take away my BIL’s pension plan *and* his SALT deduction” Wendy, it’s not that I want the pension plan taken away, but I want its expenses borne by the taxpayers in the state where the position was, not by taxpayers in Texas. Removing the SALT deduction moves toward putting the cost of state and local expenditures on the taxpayers in the states and localities.

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  6. I still don’t get why this, of all tax hikes. They’re taking from the top 10% to fund a cut largely for the top 1%. That 10% used to be the Republican base. To a first approximation, the Republican Party in the Northeast can be defined as white people who really like nice houses. At least the part that you can take out to dinner in the city without having to worry about what they might say.

    Because the cost of living is quite a bit lower in PA than NJ, the actual tax hike isn’t going to hit that many people here, but it wouldn’t take that many Philadelphia suburbanites to flip the state.

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  7. These changes only affect people who have tax bills in excess of $10,000 and total deductions in excess of $24,000 (the new standard deduction for married couples), and who didn’t previously fall into AMT. That’s a pretty small group. In fact, I wonder if Laura’s tax bill is really going up. I’m expecting our tax bill to fall, even though we live in NYC and paid a lot more than $10,000 in taxes last year, because of the AMT relief.

    Let’s reconvene in April 2019 and all report on the numbers!

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    1. Around here, if that $10,000 tax bill is on a house purchased with a mortgage, they’re probably over the $24,000 with just taxes and mortgage interest. At least if they’re young or just moved for some reason. I suppose old people are probably fine, even in the burbs, because they’ve paid down the note.

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  9. Cuomo has a plan to convert the New York income tax into a payroll tax, which will devastate commuters, who will have to pay taxes to both New York and New Jersey or Connecticut, without the tax credit they currently receive to mitigate double taxation. Then again, commuters don’t vote . . . .

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  10. Jersey made Above The Law today: “I KNOW IT’S JERSEY SO PEOPLE ARE USED TO THIS: But it feels like somebody should point out that one of the state’s sitting United States Senator will not be retried on the eleven corruption charges that still survive after he achieved a mistrial on 18 corruption charges last year. You know, just in case anybody would like to challenge this wounded politician for his right to represent the people of the state.”

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