Guadagno's "circuit breaker" property tax proposal

It would be a real windfall for me, since I pay more than 13%, but it sounds too good to be true.

http://www.nj.com/opinion/inde...

The concept is simple - New Jerseyans shouldn't have to pay more than 5 percent of their household income toward school taxes, the main driver of our state's high property taxes. If school taxes get too high, my "circuit breaker" kicks in and you stop paying.The credit would appear directly on your property tax bill and actually lower the amount you pay out of pocket if your school taxes exceed 5 percent of your household income.

Who pays? If the state then pays 100% the difference then it is actually a great proposal. If not it is either a recipe for educational decline or vastly higher property taxes for others. But I do not think she means the state will pay the rest.

That would effectively make it an income tax. I bet most people in South Orange and Maplewood pay more than 5% of income to property taxes, so this would make it necessary to raise the property tax rate a lot so that wealthier people pay more.

School taxes, not property taxes. 

Gilgul said:

Who pays? If the state then pays 100% the difference then it is actually a great proposal. If not it is either a recipe for educational decline or vastly higher property taxes for others. But I do not think she means the state will pay the rest.

The state doesn't have the money to pay the shortfall. 

How is a school district going to be able to come-up with a budget if it doesn't know how many taxpayers are going to be in the over 5% category?  If the other taxpayers than have to pick-up the shortfall, this will put some of them over 5%. 

It's not a well thought-out proposal. It probably wasn't intended to be. 

Not defending it, but she does state:

"This is not a "rebate" as some have falsely claimed in attacking my proposal. The state would chip in the cost of the credits to the local school districts with additional state aid so schools don't lose funding."

Where the money would come from is another matter, but if this were true, school budgeting would not be affected.

jimmurphy said:

Not defending it, but she does state:

"This is not a "rebate" as some have falsely claimed in attacking my proposal. The state would chip in the cost of the credits to the local school districts with additional state aid so schools don't lose funding."

Where the money would come from is another matter, but if this were true, school budgeting would not be affected.

jim - I agree that school budgeting would not be affected IF the state chips in the cost of credits. I just don't think that the state can afford the additional state aid. 

Fair point, and as a Republican, surely she wouldn't raise other taxes to do so.

Did she say where the money would come from in her proposal?  

Nope.

Are there any states whose schools are funded primarily by a similar income tax "circuit breaker" system and if so are the schools well funded? Where are these states finding the monies to credit the schools? 

ElizMcCord said:

Are there any states whose schools are funded primarily by a similar income tax "circuit breaker" system and if so are the schools well funded? Where are these states finding the monies to credit the schools? 

The article mentions some states that do this. 

?

I don't know about circuit breaker, but some (many?) states fund a much larger proportion via state income tax or other state taxes.  In Texas, where I grew up, state aid came via state sales tax and was allocated back to districts on a 'real-time' per student basis ... i.e. based on daily attendance.  So, unlike here, they wanted more kids in the schools, especially on the recorded attendance times.  (In high school it was two of the class periods a day and students cutting those periods often received extra disciplinary attention from the administration.)  

I'm pretty sure she gave the old "we'll fund it by reducing waste, fraud and abuse (WAFRAB)" nonsense.

sac said:

Did she say where the money would come from in her proposal?  

ElizMcCord said:

Are there any states whose schools are funded primarily by a similar income tax "circuit breaker" system and if so are the schools well funded? Where are these states finding the monies to credit the schools? 

We have something like this in MA. Senior citizens don't have to pay more than 10% of their income in property tax. If you earn over a certain amount it doesn't apply. If your house it assessed above a certain amount it doesn't apply. Basically only poor elderly people qualify. I'm okay with it. Schools are fine.

Caveats: Few (zero?) communities have separate school districts. There's more state aid (higher effective income tax here and a fixed percentage of the sales tax is dedicated to school construction) so it's not a 1:1 comparison. 

I think Guadagno's credit would only go up to 3,000 which wouldn't do much here.