Conventional Tax Wisdom

Wither property tax reform?

Of course, property taxes are way too high.  But every nickel raised in Randolph is spent in Randolph.  Every cent funds Randolph's schools, its parks, its police.  Because the money flows to local elected officials, voters have much greater control over spending. 

Income and sales taxes, being statewide levies, offer much less in the way of control, and present inevitable conflicts of interest.  Residents of urban areas – being net consumers of such dollars (that is, they get back more from the state than they pay in such taxes) – have an incentive to support high tax and spend politicians, who will foist the burden of local spending upon taxpayers in Morris County.  And precisely that occurs. 

On innumerable previous occasions, politicians promised that if only we increase state taxes, local property taxes will decrease.  They must think we're real rubes to fall for THAT again.  Brendan Byrne promised lower property taxes in return for sales and income tax increases; noticed those decreases?  Jim Florio, too; $2.8 billion in new taxes, and property taxes STILL increased.

Why?  Simple.  Tell a local official that he can spend what he wants, and someone else will pay the bill, and he's in hog heaven.  Instant irresponsibility.  The demand for spending other people's money is essentially limitless.

Senator Martin's thoughtful article of Sunday past makes several observations which, while not inaccurate, leave much of the picture unpainted.  First, he contends that the state Legislature ultimately makes tax and spending decisions.  Of course, he's right; we DO vote on the budget.  But our New Jersey Supreme Court, with its indefensible rulings in Mount Laurel and Abbott v. Burke threw a huge monkey wrench into the normal process, asserting that the state Constitution mandates idiotic, hyper-dense development and huge subsidies for profligate, maladministered, failing urban public schools.  Both decisions hugely increase property taxes.

The Senator further observes a certain lack of Legislative willingness to tackle tough issues.  That, too, is accurate, after a fashion.  With any backbone whatsoever, the Legislature would simply ignore the extra-constitutional pronouncements of an imperious Court acting far outside its constitutional prerogatives.  (Simply put, by what right does any court, anywhere, insist that a Legislature spend money?)

But if the peoples' elected representatives are too craven to do the job for which they are elected, the people should replace them with others possessed of the requisite intestinal fortitude.

Senator Martin's proposes a constitutional convention limited to considering the REVENUE side of the equation.  THAT is a recipe for a Morris County disaster.  Already, we receive back less than a quarter of our income tax payments.  That means – roughly – that for every dollar our property taxes decrease, our income taxes increase by $4.  Not much of a bargain, if you ask THIS Morris County representative.

And, finally, the Senator offers no suggestions respecting what such a convention – or a less pusillanimous Legislature – should do to meet the challenge.  Allow me.

First, to ensure responsibility, he who spends the money must raise the taxes to support it.  It will not do to create a class of citizens with a vested interest in supporting taxes on their neighbors.  Hence, any property tax "solution" must be local, if control over schools and spending is to be local.

Second, any "solution" must control spending, primarily in urban schools.  Why is it that some Morris County districts manage on $8,000 or so per kid while Newark and Jersey City spend something like $15,000 to $20,000?  Why do 30 districts, serving only about 18% of our children, reap more than half the total educational aid?

(New Jersey, led by Newark, boasts five of the ten biggest spending large school districts in the entire nation.  Newark spends more per pupil than any other large district in the country.  Other urban districts, in high costs states like California, spend half as much.)

There are lots of very simple, interim solutions we could propose.  We could take the entire income tax, have the state assume the entire cost of special education, and then divide up the rest of the money equally among the school children of the state. 

We could rebate back the income tax to the municipality in which the taxpayer lives, even permitting the municipality to set the rate to encourage restraint.

We could enact a program to encourage consolidation of municipalities, with real incentives for doing so.

We could move school board elections to November, or, perhaps, abolish school boards altogether and make education a department in municipal government.

We could abolish tenure.

We could offer true pension reform in the nature of 401(k) plans, abolishing expensive defined benefit plans in favor of defined contribution plans.

A "revenue neutral" convention is NOT a courageous proposal.  Indeed, it effectively locks in the present, bloated spending levels.  It freezes Morris County residents into a permanent state of tax serfdom, perpetually doling out huge sums for schools and municipalities elsewhere.  (Municipalities which seem to have enough money to spend on frivolities like $200 million arenas and which have nothing better to do with their time than appoint racists as "poet laureate" of their schools).

Courage would be standing up to the NJEA, to the Supreme Court, and other powerful spending interests which have absolutely no interest whatsoever in true reform, and every incentive to oppose it.

One thing, though, is certain: a tax shift is not the answer.  The inevitable result would be to destroy New Jersey's economy – starting with Morris County's –  and, ironically, probably wreck the very schools which help make this state a desirable place to live.

We need no "limited" constitutional convention to provide these answers, just legislators with the kahones to do the job they are well paid to do.