Man created government and taxes evolved!

The goal in a democracy, is to ensure that government is efficient and taxation is equitable.

One should consider the impact of taxes of all kinds as we move through the schools, pursue a career and settle down with family planning for retirement and and beyond. This section takes a look at some typical cases and evaluates the relative cost of the taxes which burden individuals in New Jersey. These models pertain no one individual, but serve to remind us that one many different folks in all phases of life will be impacted by a tax reform. Tax and social policy evolves over a lifetime, so no one set of rules has persisted over one's lifetime. "We must be careful what we pray for!".

In New Jersey, taxes vary over one's productive lifetime, and in retirement, Property Tax predominates for many individuals. Of course their is no average tax payer, but trends exist over a lifetime which can be approximated for most tax payers.

Tax equity is necessary for liberty!

Tax Shifts Predominate Over The Generations

Young workers generately do not pay Property Tax, but, as workers, pay FICA.

FICA taxes are contributions to the Social Security, Worker Disability Insurance, Dependent Welfare Insurance, and Medicare support; FICA taxes are paid by all workers until retirement.

New Jersey returns some revenue to reduce the Property Tax impact on groups.

In New Jersey, Property Tax is a tax on "real property" namely real estate. (In some States, automobiles and other personal property are taxed.)

State and Federal tax policy have numerous provisions which recognize offsets are desireable.

Income taxes, both Federal and State, predominate in the productive working years, and are collected on a graduated scale based upon income, with higher tax rates at higher incomes.

When in retirement in New Jersey, Social Security income is tax free, Federal taxes a portion of Social Security income, thus providing relief to senior citizens.

Property Tax rises to be the largest portion of total taxes paid by seniors.

Property tax an high medical expenses offset the amount of New Jersey and Federal income tax.

For some with 401k or IRA savings programs, the deffered income is paid out in retirement years, and can raise the yearly income depending on the withdrawal rate.

It is not suprising that over a lifetime, with varying income levels and real property individuals may pay more taxes than their neighbor at the same income. In our society, the graduated tax rates based upon income, attempts to ease the tax burden on those with less income, and pass these burdens on to individuals with higher incomes and the ability to pay.

We will illustrate two profiles: 1) variation of taxes over a single life, and 2) variation of taxes among various taxpayers with the same income and real property.

Common Income Levels For Different Residents

A coarse evaluation of a ten of taxpayers in different Tax Filing Status from youth to seniors, and single and married, all with the same income and property value are examined for the current tax allocations and under a plan with a 25% shift in Property Tax transferred to and distributed in part to Income Tax (75%) and the remainder to Sales Tax(25%). In the first group, because of the Income Level and Property Values, all groups would see net less total taxes.

The second case considers the same ten taxpayers, however the Income Level is increased and the Property Value are examined for the baseline and the reallocation used for the first set. In the first group, because of the Income Level and Property Values, some in this groups would see net increase in total taxes.

Return to Home Page A Public Forum On Property Tax