Why property taxes are so high in New Jersey

It is the perennial complaint of New Jersey homeowners: Property taxes are too high.

The property tax dates back to colonial times, with a half penny per acre tax on property first imposed in 1670, according to the New Jersey State League of Municipalities’ “A Short History of the New Jersey Property Tax and the Long Road to Reform.”

Commissions have studied the issue for decades and made recommendations that largely were ignored. Most of the efforts made by lawmakers and governors have had little effect on the amount New Jerseyans pay.

New Jersey’s highest-in-the-nation property taxes are a problem with no easy solution.

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Why are taxes so high?

New Jersey relies heavily on the property tax to fund local governments and schools. The tax pays for municipal services — police, roads and the like. It pays for local and, sometimes, regional public schools. And it pays for county government — roads, parks, elections and more. Depending on the municipality, there may also be open space, library or fire service taxes.

Last year, local governments levied more than $27 billion in local property taxes. The bill is so high, in part, because New Jersey is a high-cost state.

The state has 565 separate municipalities and even more school districts, nearly all of them led by their own administrators and support staff – who are often doing similar jobs in very close proximity. Oofficials say state mandates add to municipal costs, as well.

At the same time, exclusive of federal aid, the amount of assistance the state gave to municipalities to defray their expenses represented just 15 percent of total spending,. What’s more, only about one-third of school spending is covered by state aid.

According to the Tax Foundation, a Washington, DC-based think tank focused on tax policy, New Jersey raises the second highest percentage of state and local taxes from the property tax – representing 48 percent of all taxes. Only New Hampshire raises a higher percentage — 63 percent — but the state has no sales tax. The national average is 33 percent.


NJ Spotlight, an independent online news service on issues critical to New Jersey, makes its in-depth reporting available to NewsWorks.

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