100 Economics Question of the Day: An Intermittent Blog: The Cost of Great Schools

Monday, August 07, 2006

The Cost of Great Schools

One thing about Saint Christy's coke-inspired 1993 tax cuts is that they were always "deferred tax liabilities," as PGL at AngryBear puts it, not true cuts.

It's time to pay the piper--and is anyone surprised that the bill is being given mainly to those who reaped no benefit from the previous cuts?

Then again, this is sillynot quite accurate:
Gov. Jon S. Corzine of New Jersey said... “Our citizens pay through the roof for a tax that is imposed without any regard to income or ability to pay.”

It is true that I could not afford to buy my house right now; the property tax bill passed the mortgage last year, if not the one before. But it is also true that property taxes are assessed based on the value of the land and building one owns--those "property rights" one hears so much about. And one of those rights is the right to sell those assets. If you don't like living in the state that provides the highest per-pupil public education spending of any in the union, you are not forced to live in it. (On the other hand, if you want that benefit without any of the cost, then you're trying to cause a free rider problem.)

It should come as no surprise that several of the states with higher property taxes are those that face rising costs but do not use or have other tax options:
Earlier this year, legislators in South Carolina and Texas — two states in which the rise in property taxes has outstripped that of income by a wide margin — approved measures to relieve the burden with rebates or caps. And in Idaho, the governor has called a special session of the Legislature to address the issue.

It is only three 'grads later that Ford Fessenden gets around to mentioning that tax bills have to be paid with taxes, and what you call them affects changes, not the need to pay them:
New York City property taxes are rising rapidly as well, up 47 percent since 2000, compared with just 5 percent from 1995 to 2000. But city property taxes are lower than those in the suburbs because most of the city’s revenue comes from income and sales taxes.

And it is only at the end that we find the reality described:
Bob Vena, 63, a plumbing contractor in Hazlet, N.J., has been a beneficiary of the real estate boom. He bought his home from his parents 25 years ago, and he also owns a bungalow in Matawan. Today the houses are worth many times what he paid for them. [emphasis mine]

But the taxes on his homes have been rising steeply, he said, and now total $13,500. Business is good enough that he can afford them, Mr. Vena said, though it is becoming a strain. He said there was little he could do to increase the income from his plumbing business to keep pace.

“Eventually,” he said, “I hope to sell everything and just get out of New Jersey.”

The appreciation of those houses has been much more than enough to pay for the increase in Mr. Vena's total property tax bill. Will we see an article from Mr. Fessenden later about all the people who sell their New Jersey houses to live a life of privilege elsewhere?

(Cross-posted at Marginal Utility)


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