What do New Jerseyans answer when asked to name the most unfair tax they pay? If you said property taxes, you are correct. If you said something else, I’d like to be among the first to welcome you to our state.
In public opinion polls stretching back nearly 20 years, New Jersey’s property tax consistently ranks as the most detestable when stacked up against the federal income tax, state income tax, and state sales tax. In a September 2009 Monmouth University/Gannett New Jersey Poll, 59 percent of state residents chose property taxes as being the least fair. This is similar to the 61 percent who said the same in 2005, which was up slightly from the prior decade – 54 percent in 1994 and 47 percent in 1991.
The bottom line is that no other tax in New Jersey comes close to raising the public’s ire as much as the property tax. In fact, property taxes are the number one reason people give for wanting to move out of New Jersey.
In a poll we conducted earlier this year, 80 percent of homeowners told us that, if they had to choose, they would like to see their property tax bill reduced rather than their state income tax bill. And that even included a majority of those who currently pay more in state income taxes than they do in local property taxes!
To be fair, we in New Jersey are not alone in detesting our property taxes. An Elon University poll of residents in supposedly low-tax North Carolina last year found 49 percent who said that local property taxes in that state were unfair. This result was nominally higher than the 46 percent who rated North Carolina’s personal income tax as unfair. And this sentiment even extends overseas. A YouGov poll taken in Great Britain in 2007 found that 67 percent rated their local council tax – their property tax equivalent – as unfair, compared to 41 percent who said the same about the income tax.
At its core, there is something about how property taxes are levied that just irks people. While income taxes are based on wealth, property taxes do not take into account one’s ability to pay. And that just strikes people as unfair, regardless of how much their property tax bill is.
The big difference between New Jersey and other places seems to be the all-consuming nature of the issue. During last year’s campaign for governor, the number one issue Garden State voters wanted addressed was – you guessed it – property taxes. I doubt that is true in any other state.
It may be useful to compare New Jersey public opinion today to California in the late 1970s. Back then, a Field Poll found that 70 percent of Golden State residents said their state and local taxes were too high, with 60 percent laying most of the blame on property taxes. In 1978, California voters passed Proposition 13, which placed a 2 percent cap on property tax increases. Two years later, 70 percent of the state still said their taxes were too high, but this time they tabbed the state income tax as the primary offender.
The message from the California experience seems to be that you’ve got to either reduce spending on services or wind up shifting the burden somewhere else. And it’s interesting to note that even 30 years after Proposition 13 capped annual property tax increases at 2 percent, 29 percent of California residents still say their property taxes are too high.
This is certainly food for thought as Governor Christie and others push for a 2.5 percent property tax cap here in New Jersey.