The Plan to CUT PROPERTY TAX
| October 9th, 2009 | Category: Campaign News, Daggett Press Releases, featured |Click here for the Tax Reform - Slide Presentation
Chris Daggett, independent candidate for Governor, today proposed a fundamental restructuring of the state’s tax system, changes that will deliver up to a 25 percent property tax cut to all New Jersey homeowners to a maximum of $2,500. All senior citizen property owners will receive the maximum cut of $2,500 per year.
“Property taxes are the number one issue in New Jersey and the main reason why people are finding the state unaffordable and leaving for other states. New Jersey is the only state in the nation where residents pay more money in property taxes than in income, sales and corporate taxes combined. This program will end that inequity,’’ said Daggett, the only candidate in the race to propose a specific property tax reduction plan.
Daggett’s proposal revamps New Jersey’s entire tax system and realigns the state’s four major sources of state and local revenue along the lines of recommendations of academic experts and most influential state organizations. It also provides more stability and balance to a tax system which has changed dramatically as the nation and state have largely shifted from a manufacturing economy to a service-based economy.
New Jersey’s overreliance on property taxes is the reason people regard it as the biggest problem facing the state, Daggett said. The only way to achieve an immediate cut in property taxes is to shift some of the burden to another tax, he said.
Under the plan, the $1.6 billion spent in this year’s budget for property tax relief programs—including homestead rebates, the senior citizen property tax freeze and the income tax write-off for property taxes—would be folded into a property tax cut that would be deducted directly from homeowners’ property tax bills, as proposed by the Legislature’s Property Tax Study Commission three years ago.
Daggett’s tax reform plan would extend the existing 7 percent sales tax to a wide range of personal, professional and household services, including services provided to individuals by professionals such as lawyers, accountants and architects. The sales tax extension would not include business-to-business services. The expansion would add $3.9 billion in tax revenue.
The $3.9 billion in new sales tax revenue would be combined with the $1.6 billion from existing property relief programs to fund the $4 billion property tax cut, a $620 million reduction in the income tax surcharge, a $750 million drop in corporate income taxes and a permanent source of funding for open space to cut future debt.
“New Jersey’s tax system is broken. Democrats and Republicans keep trying to deal with recurring deficits with one-shot gimmicks and borrowing that puts the state further in debt,’’ Daggett said. “We need new thinking in Trenton to solve our state’s fiscal crisis. Only an independent is capable of changing the system.’’
The most important component of the package is the imposition of a cap on municipal, county and school district budgets based on the Consumer Price Index (CPI). If a budget exceeds the cap, homeowners in the town will not be eligible for the new property tax cut, a provision that will serve as a hammer to control government spending.
“We cannot hold down property taxes without addressing the employee salaries, health care and pension benefits that are the real cost drivers of state and local government spending,’’ Daggett said. “This provision gives local governments and school districts the weapon they need to finally say no because this program carries a big stick: If you exceed the cap, you forfeit the property tax cut for your citizens.’’
Daggett said imposition of the cap could save New Jersey taxpayers approximately $100 billion in property taxes over the next decade compared to the average rise in property taxes over the past 10 years. The cap also will cut the state’s projected $30 billion pension deficit, which is based on actuarial calculations that assume the continuation of annual salary increases of 4.5 percent to 5.5 percent for public employees; pensions are based upon the three highest years of salary, so if employees retire at lower salary levels, pension costs are reduced.
A key element of the tax overhaul is designed to make New Jersey more competitive with other states by reducing corporate and income tax rates. The plan funds the reduction of the top income tax rate from the current 10.75 percent to 8.97 percent, which drops New Jersey’s top rate from third-highest to seventh-highest in the nation. The 10.25 percent and 8 percent brackets also return to the previous levels of 8.97 percent on income over $500,000 and 6.37 percent over $75,000.
New Jersey’s corporate income tax rate will also be reduced under Daggett’s plan. The top rate would drop from 9.36 percent (the statutory 9 percent rate plus a 4 percent surcharge) to 7 percent, which would drop New Jersey from sixth-highest in the nation to 25th, below both New York and Pennsylvania. The rates on small business would drop from 7.5 percent to 5.8 percent on businesses earning between $50,000 and $100,000, and from 6 percent to 4.7 percent on those earning less than $50,000.
“These tax cuts make New Jersey more affordable for people and more competitive for businesses, and will bring jobs back to the state,” said Daggett. “Just as important, the cap will put a long-term brake on property tax growth and school, municipal, county and state government spending.”
The $3.9 billion sales tax expansion includes a $205 million extension of the 7 percent sales tax to vacation home and condominium rentals to establish a stable source of funding for open space preservation and related uses. Only 19 percent of the tax would be paid by New Jersey residents, and it makes taxation of private rentals comparable to hotels and motels, as most states with shore tourism economies, including North Carolina and Florida, already do.
The plan keeps Daggett’s promise to identify a stable source of funding for open space preservation by dedication of $100 million to protect open spaces and preserve farmland. In addition, this stable source of funding would provide $20 million to triple funding for tourism promotion, and up to $10 million would be set aside to replace beach badge revenue for Shore towns or counties that are willing to make their beaches free.
Finally, as with the existing hotel and motel tax, the plan allows municipalities with vacation homes and condominiums to add a 3 percent local option tax on seasonal rentals by vote of their governing bodies. This option would provide up to $60 million to fund the burden of tourism or reduce property taxes in towns with seasonal rentals; 94 percent of seasonal rentals are Monmouth, Ocean, Atlantic and Cape May counties.
“This tax reform plan makes New Jersey’s tax system more equitable, and it also makes next year’s budget problem more manageable. At the same time, the plan begins to deals with the $130 billion in long-term unfunded liabilities by finally beginning to rein in the pay increases given to public employees that drive up both local property taxes and state pension obligations,’’ Daggett said.
How does Mr. Daggett propose to replenish, and provide a stable source of funding for, the Transportation Trust Fund? All indications are that it will soon be insolvent while our roads and bridges are crumbling and many have been classified as “dangerous” by the federal government.
Hello My name is John Ensslen I reside in South Western New Jersey. We have many resources here Which can be reclaim for our society . Also many waste such as sewage and our own trash New Jersey is more know as Garbage state than the Garden STATE. In Fact, Governor Conzine wanted to take away the Agricultural Department It was saved by the Famers & Gardeners of this State .Along with our local Senator Sweeny. I feel we can use this to help Business & society No matter what in society it can be recycled or used for Energy. Example, Bridgeton New Jersey is Finally building a ethonal plant to help farmers and lower gas prices on diesel for our local trucking industry. I feel thes can be inplanted in nearly every county especially in Southern part of the States. Also the State can save money of using or cost saving making thier buildings highly insulted and Low E windows.Along with solar panel to reduce energy lost. I hope that Southern New Jersey can build a trash to Electic plant . Also We have few older industries that depend on Natural Gas. When the Natural gas prices go up, they Shut down. I say let the community help by burning it’s sewage to methodal gas. It ’s nearly the same as Natural gas. My rent has went up nearly $200 .00 per month, Since Govenor Conzine has been in Office I can NOT entirely blame him. We were in Pres. GW Bush era.Who cared about nothing entirely,except himself. That is another reason, I will not vote for GOP candidate . I hope you are in guburatoral debates. If there is any.We(New Jersey) also in savage industrial in the World.We can use some of this to help build homes What are you going to do with rental rebates. I am disabled by the Veterans AFFAIRs and service connected..Yet I am being investiagated By the New Jersey tax office to see if eligible for this Rental rebate.They claimed I have to be on Social security Disability. If I am really Disabled. The IRS believes it. I am So does the VA recognize I am . Why Not this NEW JERSEY STATE.
Chris Daggett is like a breath of fresh air (if there’s any left) in New Jersey. While the two major candidates are terminally locked in their political mud-wrestle (credits to the Newark Star Ledger) and neither of them has said anything substantive about their plans if elected, Chris Daggett has actually submitted several proposals that really make sense. I’m 70 years old and have spent all but 10 of those years in New Jersey, and have never seen a candidate for office in this state address the property tax issue as simply and effectively as his latest proposal. It’s eminently doable and fair, and I believe only an independent candidate can pull it off. There isn’t two cents worth of meaningful difference between Republicans and Democrats in this state, and their only interest is in what’s in it for them. They’ve all been bought and paid for by various special interests, and too many political debts need to be addressed. The common Jersey taxpayer just doesn’t matter to them anymore. That’s why I’m going to vote for Chris Daggett for Governor of New Jersey.
Expanding the sales tax and applying an immediate credit to property taxes is a start. We need to go further because without stricter limits nothing will slow the rise in local, law enforcement and educational spending. We need a California style limit on property taxes as a share of property values. California’s limit of 1% would certainly be too drastic for New Jersey, but 1 1/2% might work. For the transition period, taxes wouldn’t be lowered beyond Daggett’s credit, but wouldn’t rise either if they were above the 1 1/2% threshold.
Mr. Daggett, as a non-union, non-tenured, non-contractual municipal employee, I’m interested in hearing exactly how you intend to cap municipal budgets. As we all know, our budgets are mostly driven by public safety salaries, which are mandated by binding arbitration. Average salary increases mandated by arbitrators are in the 4% range. Therefore it is unreasonable and impractical to place a >4% cap on local government budgets. Are you proposing to eliminate binding arbitration? Do you honestly believe this is feasible?
Also, regarding your extension of the sales tax, to which I’m not opposed, will you REPEAL any of Corzine’s tax increases? I’m particularly concerned about the health club tax. As stated above, I do work for city government and am therefore a member of the state health benefits program. I will likely save this state hundreds of thousands of dollars due to the fact that I live a healthy lifestyle. Exercise, good nutrition and a healthy lifestyle should be encouraged, not punished. Will you repeal this tax?
This is another proposal that may not get the support to pass.
In addition to Westchester County, NY, we are faced with having the highest
property tax FOR YEARS & watch residents annually leave on a large scale to live elsewhere.
Why haven’t we given this the proper attention years before this “flight” out of state become so commonplace. Even the state gives you a great sendoff, by taxing you more heavily as an exiting resident (NJ Realty Transfer “Fee”).
Every election year (whether the Governor’s Race, Senatorial, or Presidential even Freeholder, we are given optimism that relief or action will be taken…..and then, NOTHING GETS DONE!!!!! How long have we heard that NJ has the highest state taxes, car insurance rates, etc.
VOTE FOR CHRIS DAGGETT. GET OFF YOUR BUTTS AND VOTE FOR SOMEONE WHO WILL MAKE A CHANGE. IF YOU DON’T HAVE MONEY TO CONTRIBUTE, THEN SPREAD THE WORD. DON’T COMPLAIN IF YOU DON’T ACT. ENOUGH IS ENOUGH. WE ALL NEED HELP. ANY MONEY, EVEN $5 DOLLARS CAN HELP! SPREAD THE WORD! VOTE FOR CHRIS DAGGETT. IF ENOUGH PEOPLE LISTEN AND ACT WE CAN MAKE CHANGES!
Mr. Daggett:
I do not understand why the State and Federal Government are not discussing utilizing the Fair Tax
( consumption tax ) as discussed in the Fair Tax Book by Neal Boontz. It’s a definite read. States and the Federal Government should consider this option. This will bring back business, and will not punish people for making profits, allow people to save more money, and help reduce deficits. There are many more positive aspects of the Fair Tax. You can also visit FairTax.org. Taxes must be reduced for everyone to stimulate the economy. Small businesses deserve and need more tax breaks. I do not see on your website your solution to stimulate business, ( small businesses ) and decrease taxes for individuals.
What are your solutions to generate more money into the economy rather than playing with taxes ?
Dear Chris,
I met you yesterday at the Ocean City block party. I was immediately impressed with your personality and intelligence. I am pretty close to being a supporter for you, but I need to inform myself a little more about your proposals for the state. I sincerely hope that you read the Fair Tax Book, written by Neal Boortz and Congressman John Linder. I believe that it is the answer to our country’s repressive tax system. Thanks for the time. Good luck.
Carmen
Mr. Daggett,
As a registered Independent, it would be a nice change to have someone with common sense in office; I like what I’ve read about you so far on your site. Both parties are leaving bitter tastes in peoples’ mouths at ALL levels. If property taxes go up, my husband and I will be forced to leave NJ - from our first home, which we worked hard to restore (as we could only afford a fixer-upper), using most of our savings in the hopes of a good future investment. We’re EXTREMELY tired of everything but our paychecks being increased. Neither of us has had a raise in four years. We don’t even have children and 2/3 of our property taxes account for public education in our town. It’s ridiculous. I’m all for having a good system in place, in case we ever do decide to have children, but how much can they possibly need year over year??? My husband and I make do with what we have/within our means, and municipalities ought to be fiscally responsible and do the same. I hope you’re not just another “too good to be true” candidate who will bring us more disappointment if elected to office. Down with the incumbents and all the rest making empty promises. The people of the State of NJ are sick of being treated like idiots.
p.s. Can you get rid of that eye-sore Xanadu in the Meadowlands? What a waste.
Best of luck!
Lisa
HOORAY for Chris Daggett - glad to see there’s a light at the end of NJ’s long dark tunnel of high taxes and corruption. GO FOR IT - You’ve got my vote. No more two-party blockade!
Thank god for this website I really needed it.And go Daggett i hopr you win>
Dear Mr Dagett,
I am a registered Conservative, the reckless disdain that government has for our personal liberities is the root problem as displayed by the burdensome tax problem within our state. Are you prepared to reduce services and initiate a common sense budget . The 25% reduction plan is a start but establishing a $2,500 cap sounds libertarian. Our tax dollars have never been equally distributed and that also a problem. We should know what the distribution of our taxes around the state . How come there has been no talk of regionalization of services to cut cost such as police fire ambulance and more importantly schools.
Thank you for your time
I feel that the biggest problem is spending. All I hear is how to shift ways to keep getting tax money. I feel that the purpose of the state is to find ways to get more taxes from its residents. I have heard of a county office spent money to refurbish rented office space, while an empty county owned building would much better meet their needs stayed vacant. The system is set up to spend your budget or get less next year creates excessive spending. My local municipality did not spend their school budget and it cost teachers their jobs. In all current polices, to my knowledge, being responsible is bad for that entity’s future financial state aid. Coming in under budget should be rewarded and with consistency coming in under budget could be used throughout the state to reduce poor spending habits. I want to see positive change. The other party changes have discouraged my belief in “for the people” in all levels of government. I hope an independent can restore my faith in government being for the people.
It is embarrassing and depressing to know that out of 50 states, ours is #1 in highest property taxes. And what do we get for it ? Everywhere I drive, our roads are terrible and the landscape is disgusting. Weeds overgrown everywhere and our infrastructure is an eyesore.
I’ve lived in other states and let me tell you what a pleasure it is to drive without hitting potholes every 5 feet and to look left and right and see medians grass cut, etc.
Our high property taxes are raping us of our livelyhood and ruining our standard of life.
Reduce property taxes to a fair level, say 1% of value. Reduce our government spending by eliminating departments. Reduce welfare to those who truly need it. Too many people abuse the system.
Thank you.