TRENTON -- A study of the Massachusetts tax cap held up as the solution for New Jersey's escalating property tax woes said educational standards can stay strong even while governments spends less on students. The Manhattan Institute for Policy Research study released today found the cap, which limits property taxes to 2.5 percent annual increases unless voters approve higher...
A Manhattan Institute for Policy Research study released today bolstered a proposed 2.5 percent property tax proposal after studying a similar plan in Massachusetts. N.J. Gov. Chris Christie greets bidders and spectators at Monmouth Park Racetrack in Ocean Park on Saturday.
TRENTON -- A study of the Massachusetts tax cap held up as the solution for New Jersey's escalating property tax woes said educational standards can stay strong even while governments spends less on students.
The Manhattan Institute for Policy Research study released today found the cap, which limits property taxes to 2.5 percent annual increases unless voters approve higher spending, helped Massachusetts towns slow the growth of property-tax increases without forcing other taxes to rise to keep up.
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The study, written by fellow Josh Barro, said Massachusetts students beat New Jersey students on national standardized tests, such as the National Assessment of Educational Progress, in most demographic groups, except Hispanics and Asian and Pacific Islanders.
Critics of the Massachusetts cap say there were vast differences between New Jersey now and the Bay State in 1980, when the cap was enacted. Massachusetts had falling school enrollment and increases in state aid (statewide taxes, such as income taxes, redistributed to towns.) Meanwhile, wealthy towns have the wherewithal to override caps, critics say.
The Massachusetts Institute study said property taxes have grown 22 percent in Massachusetts from 1980 to 2007, compared with 102 percent in New Jersey and 68 percent across the country. Those calculations use "real dollars," which is adjusted for inflation. At the same time, other taxes rose faster in Massachusetts than in other parts of the country, but the growth was slow enough that it did not erase the cap's savings for taxpayers.
The tax burden for New Jersey residents - which includes taxes paid to other states through vacation homes and other spending - grew relative to the rest of the country, while it fell for Massachusetts residents.
New Jersey went from 10th place to having the highest tax burden in the country, while Massachusetts went from second to 23rd in the country, according to rankings from The Tax Foundation, where the study's author used to work.
Christie wants to replace New Jersey's current 4 percent spending cap with a 2.5 percent cap with fewer exceptions. Currently, towns are allowed to go above the cap for a number of reasons, such as rising health care costs and falling state aid, or if they make a compelling enough case to the state bureaucrats in Trenton.
A Star-Ledger review found nearly a third of the state's 566 municipalities were allowed to exceed the cap last year.
The Manhattan Institute study cited two towns in the states' "most-taxed" counties: The median homeowner in Massachusetts' Middlesex County paid $4,271 in property taxes in 2007, while the median homeowner in Hunterdon County paid $8,347.
"While state aid has grown faster than the national average," Barro said, "Overall it has not offset the growth in property taxes."
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