Last week, Governor Murphy proposed having state government give "Property Tax Rebates" of roughly $700 to certain homeowners, and $250 to certain renters in New Jersey. The state would spend $900 million this year, and $1.5 billion next year.
Murphy's plan is nothing new. In 1963, New Jersey did not have any state sales tax or income tax. New Jersey started a 3% sales tax in 1963 to reduce property taxes. The money went to local governments and public schools. However, instead of lowering property taxes, they hired more people, increased spending, and raised property taxes.
In 1976, New Jersey started a 2% state income tax. This was supposed to make property taxes "affordable" by giving even more money to public schools and local governments. Once again they used the money to raise salaries, hired more people and hiked real estate taxes. The same thing happened when the state income tax was increased to 2.5%, 3.5% and then 6.3% for most people.
All of these state programs to cut property taxes failed because they did nothing to cut spending. Instead they increased spending by making government employee unions richer and more powerful.
Also, these state programs did nothing to cut taxes for business properties. As a result, many businesses closed down or left the state. This cause even more property tax hikes!
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