Kiplinger’s Magazine, November 2020, ranked New Jersey as the 4th worst state for total taxes paid by middle income residents. This poor ranking was triggered solely by our high property taxes. Kiplinger’s wrote:
“For middle-class families in the Garden State, income taxes are relatively low when compared with other states. New Jersey checked with the fourth-lowest income tax total out of all the states with a broad-based income tax when we calculated income tax bills for our hypothetical family. (There’s also a payroll tax in Newark.)
Sales taxes are below average in New Jersey, too. The state sales tax rate is 6.625%. But because some areas charge only half the state rate on certain sales, the Tax Foundation says that New Jersey’s average state and local combined sales tax rate is only 6.6%.
But while New Jersey gives residents a break on income and sales taxes, it brings the hammer down when they buy a home. New Jersey’s property taxes are the highest in the U.S. The state-wide average property tax on a $300,000 home in New Jersey comes to a whopping $7,251.”
It’s true that we get a break on income taxes and sales taxes. I note that besides the lower tax districts in economically depressed areas like where we live, we have a statewide break on taxes for boats, that helps my business, capped at 3.5%. But property taxes where I live are considerably higher than amount listed in Kiplinger for a $300,000 property. We pay more than twice the amount listed in the article for properties with a collective market value of less than $300,000. That is because property values in Cumberland County peaked in 2006 and declined each year since while property taxes continue to rise. Government mismanagement of coastal water level rise response is primarily to blame for the low property values but lack of economic opportunity (no internet or public water/sewer where we live, for example) also plays a role in depressing property values.
I’ve always said that if I could move my waterfront house and business out of the state, I would. But as it is I choose to pay the high taxes for the privilege of staying in a place where I feel mostly safe and comfortable. The key to surviving in this tax climate is to reduce overall taxes rather than focus on just one type of tax.
If you live in New Jersey, I’d be happy to speak with you about ways to reduce your taxes and boost wealth over the long term.