New data released by the National Center for Education Statistics, highlighted in a recent Tax Foundation Fiscal Fact, reveal that New Jersey has jumped up to number one in terms of per pupil spending. It’s no coincidence that the state also has the highest property tax collections per capita, as well as the highest median real estate taxes on owner-occupied housing, according to the Census Bureau (based on actual dollar amounts).
These high education spending numbers are made possible by New Jersey’s high taxes in nearly ever taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. category. Typically a state will have a high tax on one item (like property or sales) and a low tax on another (like income). But New Jersey ranks among the highest taxed in almost every category. The state levies a very large general sales tax rate of 7 percent, following a hike about a year ago. (The national median is 5 percent.) As mentioned earlier, the state’s property taxes are ranked among the highest in the country by almost any measure. The corporate income taxA corporate income tax (CIT) is levied by federal and state governments on business profits. Many companies are not subject to the CIT because they are taxed as pass-through businesses, with income reportable under the individual income tax. is one of the highest in the country, and the individual income taxAn individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income. The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment. Though barely 100 years old, individual income taxes are the largest source of tax revenue in the U.S. is in the top half when it comes to collections, but the top rate of 8.97 percent is 6th highest nationally.
In terms of excise taxes, you don’t want to be a smoker in New Jersey. The ridiculous $2.575 tax per pack is the nation’s highest. One area where New Jersey residents get a break is the gas taxA gas tax is commonly used to describe the variety of taxes levied on gasoline at both the federal and state levels, to provide funds for highway repair and maintenance, as well as for other government infrastructure projects. These taxes are levied in a few ways, including per-gallon excise taxes, excise taxes imposed on wholesalers, and general sales taxes that apply to the purchase of gasoline. —the 4th lowest nationally. However, the state makes up for that with its high toll collections—the second highest in the nation (per capita), behind only the state directly south of it, Delaware.
Given these high tax and spending numbers, taxpayers in New Jersey just have to ask the question: Are the high taxes we pay resulting in sufficiently high-quality government services relative to the reduced services we would be getting if we had lower taxes? If the answer is “yes,” then high taxes should stay. If the answer is “no,” then reducing taxes should be the state’s priority.Share