Should Christie Be Cutting Property Taxes Instead?

Gov. Chris Christie was in a triumphant mood during his State of the State speech as he surveyed his record in "controlling" property taxes.

Property taxes, Christie declared, "had risen 70 percent in the ten years before I became governor. Rising property taxes were driving people out of this state. And so we joined together," he said, praising Democratic legislative leaders for their cooperation, "to cap property tax growth at no more than 2 percent a year."

"The root cause of rising property taxes is always excessive government spending," the governor said. "As with all problems, you must get to that root cause -- and together, we did it. And here's the good news: it is working. Last week, the state's largest newspaper [the Star-Ledger] announced the results of its comprehensive study of property taxes in New Jersey. The headline said it all: 'At long last, tax relief.'"

Christie's declaration of victory in the war on property taxes -- when New Jersey has the highest property taxes in the nation -- stunned Assembly Majority Leader Lou Greenwald (D-Camden), "It's a bit early for the governor to essentially be donning a flight suit and declaring 'Mission Accomplished,'" he fumed.

What amazed Greenwald more was what came next, as Christie called for a 10 percent cut not in property taxes, but in the state income tax.

Christie defended his income tax cut on the basis of economic competitiveness.

"Make no mistake – we are in a competition," Christie said. "A competition for jobs – among countries, yes, but also among states. In the last decade, two-thirds of all companies which moved jobs to a new location did not move to other countries – they moved from one state to another."

Christie is right that New Jersey is in a battle for economic survival, business leaders, economists, and relocation experts agree.

It's not just the choices CEOs make when they decide whether to build a factory here or in North Carolina.

It's the decisions Wall Street traders make when they decide whether to buy a home in Madison or in Greenwich. It's the decisions that working families make when they decide whether to move to Pennsylvania, that retirees make when they decide whether to move to Florida, and new graduates make when they decide whether to launch their new startup in New Jersey.

By any measure, it's a competition that New Jersey is losing, whether you go by loss of pharmaceutical market share to California, by the drop from first to third place in average income behind Connecticut and Massachusetts, or the persistent ranking atop the loser list for out-migration in United Van Lines' annual report on interstate moving trends.

But it isn't the income tax that makes New Jersey uncompetitive. It's the property tax.

Look at the numbers: New Jersey's $7,758 average property tax bill ranks first in the nation. Its median property tax bill of $6,579 ate up 7.5 percent of household income in 2009. In comparison, a family of four making that median income of $88,343 would pay only $1,802.08 in state income taxes – just 2 percent of annual income.

While property taxes in wealthy New York suburbs are comparable to New Jersey, Bergen County's average property tax bill is 40 percent higher than Connecticut's Fairfield County -- an important factor when executives decide between Alpine and Greenwich.

Sussex County residents moving to Pennsylvania's Pike County cut their average property tax bill in half -- from $5,948 to $2,795. Median property taxes in Pennsylvania were just $2,223, and every Pennsylvania county ranks at least $1,000 below Burlington, Camden and Gloucester in average property taxes.

Households in "high-tax states" like Massachusetts and California pay $3,000 and $2,000 less in property taxes than New Jerseyans, and the average property tax in North Carolina, home of the "Research Triangle," was just $1,209.

Continue reading this story in NJ Spotlight.

NJ Spotlight is an online news service providing insight and information on issues critical to New Jersey.