Why do New York state and New Jersey have the highest property taxes in the nation?


If you do not live in New York or New Jersey and think this is irrelevant to you, wait one second.This article is a national issue and deals with local Government corruption on a massive  scale, that makes Washington politicians look like Mother Teresa. You are not safe from higher property taxes even if you are reading this from Almaty, Kazakhstan. The article also discusses  the historical development of New York City as the financial hub of the world.

This will be a three part series. Part one below, discusses why New York and New Jersey have such high property taxes. Part two will discuss why this is totally false and it is due to complete Government corruption. Part III will discuss why the world capital of finance was built on a small, congested island, where traffic jams of an hour can be considered an average day for commuters from outside of Manhattan.

Part I is below:

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Before starting off with the reasons why citizens of New York and New Jersey pay the highest property taxes it is essential to highlight the fact that these taxes on land and building are mostly not imposed by the state but is determined by the many cities, counties, school districts and other assessing jurisdictions. The property taxes in states like New York and New Jersey are the biggest source of revenue for the local governments.  The more the local government is independent, the more taxes are levied by them to cover their municipal needs. States such as Alabama have a property tax of around 1%, because the local government has less autonomy and the state has less reliance on property taxes as that is tax revenue for the local government. (Forbes)

Additionally, it is also essential to realize that the tax structure in accordance with which the local government collects their revenue differs from state to state. Some states pay little or no income tax and pay high sales and property taxes, while some states have high income tax rate but considerably low property tax or sales tax. The government in one way or the other has to collect the expected amount of tax revenue to meet their expenses, thus, it might not be a entirely accurate to judge the tax burden on citizens of various states based just on property taxes. (DailyFinance). Although New York State (and City) and New Jersey both have state sales tax and income tax of over 7% (depending on income bracket).

Regardless, the above mentioned fact does not mean there are not any reasons behind the high property tax incurred by the citizens of New York and New Jersey. According to Tax Foundation some counties in New York and New Jersey pay three to four times the median national property tax of $1917. The residents of Westchester County, NY pay $9044 and those of Bergen County, NJ ( Bergen county will be discussed further in part II) pay $8708 in property taxes which is more than 10% of their income.

According to the Executive Director of the New Jersey League of Municipalities, William Dressel, the revenue collected by the local government of New Jersey, unlike other states, is mostly made up of real estate or property taxes.

Meaning the property taxes are high because it is the main source of revenue for the municipalities which is used to cover their expenses. Moreover, there are two main problems faced by New Jersey which contribute towards a high property tax.

Governor Chris Christie has gained extensive popularity from the GOP for his  anti-tax approach. Christie thinks that the most prominent problem in New Jersey is spending. According to Christie, among all the other states New Jersey spends the most on K-12 education owing to high number of schools, has many municipalities and independent authorities which can even be considered as inefficient, and furthermore, and also has the highest number of police per capita.

The second factor which has to be addressed is the low sales and income tax. Facts illustrate that the overall tax paid by U.S citizen is almost the same if taken into consideration the aggregate amount of taxes paid per year with respect to the income. New Jersey is heavily reliant on property taxes for revenue . Chris Christie revealed projections of New Jersey collecting a total of a little over $21 billion from personal, sales and corporate income taxes, while in 2011 NJ is estimated to gain $25.8 billion just from property taxes.

New York has a similar problem as New Jersey which is high local government spending on schools. The spending on public school has doubled since 1995 and the spending on per-pupil of these government schools has consistently been rising at a faster pace than the rate of inflation. The spending per student of New York is 50% more than the national average. The underlying reason being the existence of numerous schools in almost every district of the state with less than 1000 students enrolled. Moreover, increase in public schools consequentially means increase in public employment and therefore, increase in public payroll which further escalates the overall local government expenses. High Medicaid cost, public construction costs, and frivolous lawsuits cost also drive up the local government expenses.

Thus, in order to cover these expenses incurred by the independent local government and the high dependence of their revenue collection on property taxes as a result of low sales and income taxes are the reasons why New York and New Jersey ultimately take the crown for the highest property tax rates in the nation.

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