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In principle, a property tax is a tax on an individual's wealth. The value of all of the individuals assets, both financial (stocks and bonds) and real (houses, cars, etc). In United States, the local state and governments levy property taxes on homes and office buildings and on land. In 2000, the property taxes accounted for two percent of the tax revenues and about 72 percent of all local tax revenues. Property tax is by far the largest source of revenue for local governments. In some states property tax produce more Revenue than income taxes and sales combined (McCluskey, 97)
Property tax in early America was the only source of revenue for the local government and even then property tax was met with much opposition. This acted as a noble way for the government to capitalize on revenue collection. Despite the large number of citizens. Considering the large population this acted as a sure way of getting everyone who owned tangible assets such as land to pay taxes. Real estate property taxes are assed by State, county and Local governments. In some cases the local authorities (such as, water and sewer services) also play a role in real estate prices. The local and State government collect property taxes on, land and structures, land improvements(Additional Property), personal man-made Structures (Mobile objects) whether the property is commercial, residential or industrial and also taking into consideration the properties assessed value are all important factors when determining property tax rate. Property taxes in New-Jersey have been largely criticized due to the differences pain in various counties (Netzer, 57).
Based on property Value some states have higher property tax rates than others. But before moving from one county to another due to the tax difference there is a lot to consider. This is usually to avoid passing on potential losses that may be brought about by factors such as inflation. These are unavoidable and as such, great crew should be taken during such transactions. It's crucial to understand that there are variables involved. Some counties can generate more revenue from property taxes than other counties since they don't levy the same tax rates on income, sales or use taxes. On the case of New Jersey, it is extremely important for the state to levy the property tax. This is the policy applied in the state. This is despite the criticism it faces from a large number of citizens who have a feeling that they are over taxed. The last thing the government would do in this time of recession is overtax the citizens. Through the understanding of such situations, a clear understanding of the topic of property taxation is vital.
Real estate prices deductable on federal income tax returns, the more you pay on property taxes, the you can write off. There is no limit to the deduction on property tax. If you are a new home owner deduction of property taxes paid by seller who may have applied for your property tax debt. Being the current home owner you can make the deduction, regardless of whether or not you reimbursed the seller. Many unfortunate people have been caught up by the alternative minimal tax are not so happy with the current state of events due to the large amount they have to pay. The alternative minimum tax was specifically introduced to make sure that the nations wealthy paid a certain amount in income tax.
Due to inflation those previously regarded as financially wealthy people became the middle class. As a result many middle class American citizens fell victim to the alternative minimum tax. To increase on an already existing problem, property taxes are not deductable under the alternative minimum tax. On the other hand, the recent alternative minimum tax bill legislation should provide middle class home owners with a relief on the ever increasing tax war. The level of public service received by New Jersey citizens in their respective communities and the amount of property taxes that they pay are dependent on each other (Lumley, 145).
The amount of property tax relief funding that municipalities receive directly from the state, directly affects your bill. When the property tax bill goes up and the municipal services do not meet your needs the state Legislators and Governor should make sure the state is providing your home town with enough financial aid. Municipal property relief fund can help pay for the local services you need and can help keep your property tax from going upwards.
According to the census bureau in 2005, property taxes in New Jersey totaled $19,000,000,000, and represented 45% of all state and local own source revenue. According to the national federation of tax administrators, New Jersey was second in over-all reliance on property taxes. Among states that collect property, income and sales taxes, New Jersey is the only state exceeds its property tax collection more than its sales and income tax combined. Property taxes in New Jersey account for 98% of its total revenue (Burrell, 79).
Municipalities, schools and counties also need necessary funding for the service they provide to the county. This acts to ensure a sustainable system that runs free of hitches. However, in large economies such as the New Jersey economy, providing for such numbers would be impossible without proper planning. The plan basically is a joint responsibility of state government and local governments. The New Jersey local government is not only responsible for delivering community services (public safety, education, transportation and environmental protection) they also bear the responsibility of funding them. Local New Jersey property tax payers pay most of the costs regarding education, even though the state has a constitutional obligation to ensure reliable, efficient and thorough education for all of the states children. Other than federal and state funding, the New Jersey has property taxes plus limited charges imposed on its businesses and residents that receive or use a specific service. The state constitution and its statues exempt many properties from local property taxes. Examples include, state owned properties. Given the need of effective and reliable services and programs, and due to effects of population growth and inflation, plus the imposition of unfunded mandates and the lack of other options, the local officials have been forced into an always growing over-reliance on regressive property taxes.
Cutting the local budget can reduce property tax but unfortunately there is a limit to how much can be reduced or removed from the budget. Police benefits and salaries more often than not represent the biggest aspects of municipal begets. Post retirement benefits are also mandated by the state of New Jersey. The cost on education makes counts for the greater number of property tax . Most of it is spent on compliance with regulations and state laws. Local officials in New Jersey make very difficult choices to sustain the lid on the property taxes each every year. A large chunk of municipal, county spending and school district is mandated by state law (environmental programs, state programs, health services, work rules and benefit levels for public workers etc). Most of this is largely removed from the local control (Brody, 89).
The underlying demand for local public services to increase and the costs continue to rise due to inflation and the rapid growth in population.
The local governments are trying to hold down the costs of public services but no municipal government official is willing to raise taxes. Tithe commitment they give their constituencies they are also motivated by the property tax that they also have to pay. Property tax is usually unpopular with house owners. This is because homes are not often sold , governments must thus levy the tax on estimated value of the premises. Citizens think that the government tends to overvalue their homes. This leads to high property tax on citizens burdens.
Real and personal property taxes records are managed by the county tax board each county. Residents are paying higher taxes than they would if every New Jersey citizen that uses the city services shared the cost. Local property tax exemptions to non-local governments and charities should be revoked to increase the total amount or revenue the state receives. Maybe then, some of the problems faced by the general population like unreliable public services or underfunded schools and police services. Property taxes in the state of New Jersey have aides by 70% in the last 10 years. The amount spent by the state has raised by 50% from 2002 to 2008. Local government rose by a 69%. With these kind of tax increase New Jersey is the is the most tax hit state in the nation. Unless the state finds a new source to increase the total revenue required to run, sustain and improve the state, New Jersey would not be able either sustain their, public services (police duties, firemen, water services, sewage services etc), businesses or its citizens (Netzer, 85).
New Jersey Local Governments need dependable, sustainable and significant sources other than property taxes. Only the legislatures at the state level or the voters that elect the legislators have the power to change the conditions of New Jersey (Lumley, 96).