Back at the office for this last post from our meeting with Gov. Jon Corzine, a meeting that focused primarily on the state budget and the efforts being made by the administration to deal with falling revenues.
Fred Tuccillo, editor of The Princeton Packet, raised a question about school funding and the income tax, asking whether moving from property taxes to something else to fund schools would need to happen at some point.
That seems to me to make the most sense, but the governor said “it might be prohibitive to do that” because much of the cost of that change is likely to fall on the middle class. He said that about 40 percent of all income taxes collected in New Jersey already comes from the top 2 percent of taxpayers, meaning that it would be “very hard to do taht without changing the tax rates that middle-class people pay.”
He acknowledges the regressive nature of the property tax, saying that his commitment to rebates for lower- and middle-class New Jerseyans was designed to “lean agaisnt the regressivity of the property tax system.”
His argument, essentially, was that the increase in income taxes that the change would create for middle-income folks would be a hardship for them and not be politically pallatable.
But you have to wonder whether the decrease in property tax bills would offset the increased income taxes, as seems likely. If, as everyone says, about two thirds of local property taxes go to schools, then moderate to middle-income homeowners could save somewhere in the neighborhood of $4,000 to $6,000 in property taxes, if not more. How much would the shift to income taxes cost the same household?
