Property tax must be eliminated

Guest Column

‘Private property is not sacred.” A quote from Venezuela’s President Hugo Chavez. He asserts this in response to those protesting his practice of seizing private property for redistribution to others. Americans scoff at that notion. The Fifth Amendment protects us from such.

Well, that was until the Kelo v. New London (Conn.) U.S. Supreme Court decision. Now local governments have been authorized to seize private property to give to other private parties.

What is it that drives this clearly unjust action of seizing private property by those we have elected to govern?

One primary impetus is the desire to increase ratables (the property tax income). Why collect taxes on twenty $300,000 homes when you can have 50 to 100 $750,000 and up condos to tax?

As long as the principle of the right to private property means nothing to town leaders, who cares if some people are hurt, they want taxes.

In these clearly misapplied and abusive exercises of eminent domain, the ones on the losing end are flabbergasted to find they really do not have private property rights. They do not really own their homes.

And there is another abuse of private property most people do not think about or realize exists. Again, it is one in which people discover they have no property rights. It is when one’s home is sold because they are unable to pay property taxes.

This is another example of government asserting that it is really the one who owns your land and home. In reality, we are nothing but renters. And, again, property taxes are the culprit and driving force. Government needs taxes, and if you cannot afford to pay them, they will get someone else who will.

So, due to these two hot issues, property taxes are a major topic in this year’s gubernatorial and legislative races. Everyone is talking about how to bring “relief” or “reduced reliance” upon property taxes. Of course, they do not see the eminent domain issue as closely related, if at all. But it is. Get rid of the property tax and you eliminate a major reason to seize people’s homes, whether for ostensible development or (the no longer existing) nonpayment of property taxes.

One proposed way to address the property tax issue is a constitutional convention. Some object because the current proposal does not address the spending side of the issue. Others think it should only be addressed by a special session of the legislature. Others protest that taxes will have to be raised if anything is done to reduce property taxes. And still others say that it must remain a tax because it is a stable source of income for the county and localities.

Bull-ony!

First, to have a convention that does not deal with the expenditures side will force delegates to deal exclusively with the fairness issue. Who is to pay how much is really what this is all about. Those paying anywhere from 10 to 50 (or more) percent of their total income just for property taxes need equity put into the way we collect taxes to pay for services. Property taxes are the wrong way to fund the county and municipalities as well as schools.

Any tax that is not based on ability to pay is inherently inequitable, regardless of how big or small. Why would we think it is wrong to fund education this way but not the county or town?

Therefore, it is better to not have them deal with spending at all. This will force a convention to deal more directly with a real solution to the root problem. It will avoid coming up with a phony solution; one that will rely upon anticipated or, at best, ephemeral cost savings. That is because if proposed savings are factored into the fairness issue and those savings are not real or permanent then that will mean fairness will not have been dealt with.

Do not worry, the spending issue will remain after fairness has been dealt with. And then dealing with it will have to be real and not disguised due to the fairness issue being part of the equation.

In fact, once the costs of running the schools, town and county fall more heavily upon those with more influence and power to change things, then action to find real cost savings will ensue. But as long as those with the ability to pay lack incentive, paying relatively minuscule proportions of their income for these services, while those who can least afford it are burdened with carrying an inordinate share, nothing substantial or lasting will happen on the spending side.

Just think what it would be like and how fast action would be taken if those used to paying 5 percent of their income in property taxes were suddenly saddled with paying 20 or 30 percent of their gross income in taxes. Does anyone believe they will just swallow hard and do nothing?

One other objection people make when elimination of the property taxes (or even huge cuts in it) is proposed is the (specious) claim that taxes will have to be raised. This canard is almost not worth addressing except it works. Taxes may be redistributed. They will not necessarily go up. As a whole, at least. So it really is a matter of whose ox is being gored.

At this time, the tax burden is unjustly placed upon those at the bottom of the income ladder.

But there is an additional reason why there is resistance to eliminating the property tax. The ability to raise taxes year after year would be lost. An ability-to-pay (income) based tax would be the only equitable solution. And can you imagine everyone’s income tax going up on an annual basis? That would not last long.

This, too, would force Trenton to deal with the spending side of the issue. Decades of double inflation salary increases, overly generous benefits, poor fiscal management, etc., would cease.

It is a win-win idea. Those who can least afford to pay a tax when least able (retired, out of work, on disability, downsized) would have the protection of a tax that is not collected regardless of one’s ability to pay. When is the last time the IRS or Trenton knocked on someone’s door to ask for the tax they would have owed if they had been working? And those who thought owning their home in their retirement years would be one major source of security would no longer be filled with constant worry and fear of losing it. They will have that key safeguard and stability in their old age.

And to answer the claimed benefit that we need the property tax because it is a “stable” source of funding, not subject to economic downturns: Another canard. How many times have state employees in Trenton been sent home in November for the rest of the year because they were out of money?

This objection is just more demagoguery by those who like the power they have to force annual tax increases. They (can you say NJEA? How about State School Board Association? Or N.J. State League of Municipalities?) do not want that power jeopardized. Do not listen to their siren song.

The property tax dilemma is one of basic fairness in how we are going to collect taxes to support government provided services. To continue a system that is fundamentally unfair, asking those with the least means to shoulder an inordinate share of the cost is wrong. We must correct this wrong.

Elimination of the property tax is the only way to do so.

John Hendrickson is a

resident of Middletown