While much has been said regarding the need to overhaul New Jersey’s property tax, the discussion has centered around the over-reliance of property taxes for funding our schools. It seems that it is necessary to expand that conversation to involve the entire concept of assessing property taxes on a valuation basis.
In an age where we now experience large swings in the value of everything including real estate, it is hard to imagine that we are attempting to base taxes on what something will sell for. Real estate has fluctuated dramatically in the past decade, most recently in a negative direction. The percentage of decline has varied not only between residential and commercial but also between the different types of commercial properties. This is not only causing inequitable taxation, it is also causing a financial administrative nightmare in municipal tax collection offices throughout the state.
There are numerous problems in the administration of the current system: Large swings in property valuations between bubbles and busts; the costs associated with township-wide revaluations, and when to schedule them; additional costs to defend yearly property tax appeals, and then how to budget for credits should the taxpayer win a lower assessment. Most citizens do not realize how municipal budgets are overly impacted when the county tax board grants appeals. As the collector of taxes for school and county government, 100 percent of their bill must be paid, yet the municipality will collect only a portion of the amount. This shortfall along with the full cost of defending and defining assessments must be paid for from the municipal budget, creating an additional burden on local property taxpayers.
The current property tax system is a major frustration for the property owners as well. A homeowner or business may feel their property is overvalued; however, the appeal process can be daunting. The time, expense and difficulty of navigating the system can make many property owners just throw up their hands in resignation. On top of that, consider that it is also economically regressive in so far as it dissuades investment in homes and businesses. Residents who upgrade their kitchen or install siding have to consider not only the cost of the improvement, but also the property tax consequences. Why should these improvements cause increases in what you pay in local, school and county taxes? These problems and more should make everyone question the entire concept of taxing property on an ambiguous valuation method.
Why not study the concept of taxing property on an objective system based on facts and not on subjective ideas on what someone thinks the property will sell for. Could we not base property taxes on the square footage of land and the cubic volume of the structure? This would seem to be a much more stable and standard method of assessing property tax. Rates could be tweaked in many ways to equitably tax real estate. They could be scaled for the varying types of residential housing, and on the commercial side the rates could be determined by zone or use. There could be different designations within the tax structure; however, they would not be pegged on property values.
Taxing property based on valuation has proven to be unfair, punitive and impossible to accurately manage. The methodology is so seriously flawed it is past the time to review the entire concept.
Curtis Stollen Member, Spotswood Borough Council