Sunday, October 18, 2009

Sam Thompson: Daggett's Plan Will Not Reduce Property Taxes For Most, Will Increase Taxes On The Middle Class

Assemblyman Samuel Thompson (R-13) has a great OpEd piece in the Asbury Park Press today, Daggett's tax plan will aid only the affluent.

Daggett claims his plan would deliver up to a 25 percent property tax cut to all homeowners to a maximum of $2,500 while all seniors would receive an annual $2,500 reduction. People interpret this to mean Daggett would reduce their property tax burden more than the current programs.

For our most vulnerable householders — the more than 50 percent whose property taxes are at, below or $1,000 to 2,000 above the median property tax of $6,320, his plan amounts to little more than rearranging the deck chairs on the Titanic. For these homeowners, the plan would, at best, produce minimal to no additional property tax relief beyond what they are presently receiving. Many seniors and the disabled would actually see their property tax relief decreased.

The primary beneficiaries of the Daggett plan would be those with incomes above $125,000 and the most affluent who have property taxes of $10,000 or more and do not qualify for any of the existing property tax relief programs because their incomes are too high.

The Daggett plan calls for the elimination of all of the existing property tax relief programs to partially fund his proposal and replaces them with a tax credit. Thus, the Homestead Rebate, the Senior Property Tax Freeze, the property tax deduction from income taxes, the $250 senior property tax credit and the $250 veterans tax credit would all be eliminated.

Currently, a non-senior household with income up to $50,000, paying the state median property tax of $6,320, qualifies for a 20 percent property tax rebate, which amounts to $1,264. They also are able to deduct their property taxes from their state income taxes, providing an additional $276 reduction in their property taxes for a total of $1,540.

Daggett would eliminate these programs and replace them with a 25 percent property tax credit which, in this case, would amount to $1,580. These homeowners would receive a net new reduction in their property tax liability of $40 per year. They would undoubtedly pay more than this as their share of the $4 billion sales tax increase included in his plan.

Read Thompson's entire piece here.

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