Post by Freehold Resident on Jul 14, 2006 14:16:26 GMT -5
NJ SMART (New Jersey Save Money and Reform Taxes) Act
Assembly Bill No. A-1284
Senate Bill No. S-187
Sponsored by: Assemblyman Louis Manzo and Senator Joseph Doria
This bill, designated the NJ SMART (New Jersey Save Money and Reform Taxes) Act, establishes an NJ SMART rebate to effectively refund 50% of all homestead public school property taxes for all homestead owners and residential tenants, and establishes
a gross income tax surcharge to largely fund this substantial property tax relief.
The NJ SMART Act shifts 50% of school taxes to a State school income tax surcharge dedicated to refund to homestead owners and tenants 50% of the school taxes they pay as part of their property taxes or rent.
The NJ SMART rebate for most taxpayers will equal or exceed the proposed gross income tax surcharge and pay dramatic refunds of their school property tax payments.
All homestead owners who pay property taxes on that primary residence will receive school property tax relief on that homestead. Residential tenants will receive relief equal to 50% of 9% of their rent payments.
NJ SMART rebates for homeowners will be paid through electronic funds transfer made by the Director of the Division of Taxation to the local property tax account maintained by the local tax collector for the homestead of the claimant. The NJ SMART rebate amounts will be paid through these quarterly transfers on the dates that the quarterly payments of local property taxes are due. This will allow for the local property tax bill presented to claimants to show the expected offsets if claims for the SMART
rebates are approved in a timely manner and the information is forwarded to the local tax collector before local property tax bills are prepared. Residential owners may elect to receive these quarterly payments directly. The SMART rebate amounts for residential tenants will be paid directly to the claimant in one payment or claimants may elect that NJ SMART rebates be paid in two payments directly transferred to a personal bank account that they designate.
Seniors age 65 or over and disabled homeowners and tenants who received up to the maximum $1,200, $800 or $500 homestead rebate or up to the maximum $875 tenant
rebate during 2004 will be allowed SMART rebates of at least the amounts they received during 2004 if they continue to meet the eligibility requirements and have the same homestead. These 2004 maximum amounts will be subject to annual cost of living
adjustments for tax year 2005 and thereafter as is set forth in the homestead rebate statute. In this way the NJ SMART rebate program will not eliminate the level of property tax relief of the Homestead Rebate program paid out in 2004 that was directed to senior and disabled homestead owners under certain income limits. Beginning with taxable year 2005, the costs to cover the property tax deduction under the gross income tax and the homestead property tax reimbursement will also be reduced to the extent that 50% of school property taxes that are paid for under the NJ SMART rebate Act will not be duplicated under those more limited tax relief programs.
The State school income tax surcharge will be established annually by the State Treasurer as a uniform percentage of each New Jersey gross income taxpayer's adjusted gross income tax liability. The surcharge tax liability will be based upon gross income tax liability that would be due without allowing for claims of gross income tax credits. Thus, the surcharge will be based upon an underlying progressive State income tax structure. However, no State school income tax surcharge will be imposed upon taxpayers with taxable gross income of $30,000 or less. Also the uniform statewide rate for the surcharge to be determined annually by the State Treasurer will be adjusted for any amount of income that exceeds $500,000 so that the surcharge is imposed on liability assessed on that amount
based on the prior 6.37% marginal rate, and is not based on the "half-millionaire's" rate of 8.97% now imposed upon that income.
The rate of tax under the surcharge will be set to raise only enough revenue, after consideration of funds available from the savings from the elimination of the reduced property tax relief programs, to pay only for 50% of each residence's school property taxes. That amount will for most taxpayers under the progressive gross income tax structure more than match the surcharge they will pay and provide substantial payments that may be paid directly towards homestead school property tax bills.
The surcharge will commence with the start of a calendar year, except for a partial taxable year 2005 surcharge which will start on July 1 in order to pay for the distribution of the first two quarterly NJ SMART rebate payments for August 1, 2005 and November 1, 2005. The homestead school tax payments made during the prior year, and property taxes paid through rent, will qualify the homestead property taxpayer or tenant to apply
for the NJ SMART rebate beginning during the first year that the surcharge is being paid.
The NJ SMART rebate that will be approved based upon that application will reduce the next four quarterly property tax payments beginning August 1. Homestead property taxpayers and residential tenants who pay no gross income tax will also file an application under the same schedule.
The basic proposals set forth in the NJ SMART Act were developed by the Citizens for School Tax Reform organization and have been endorsed by the New Jersey Coalition for Property Tax Reform. The mission of the New Jersey Coalition for Property Tax Reform is to advance and promote the removal of school taxes from local property tax, a regressive tax, to a progressive state income tax, while maintaining the current
system of local control of public education.
Under this bill the State would provide significant annual property tax rebate payments directly to local property tax accounts in order to reduce individual homeowners property tax payments. State payments would be funded by reductions in previously
existing property tax relief programs and an adjustable annual surcharge on certain gross income tax liabilities. Revenues and resources are designed to match anticipated expenditures.
Based on Tax Year 2004 data that indicates statewide school property taxes of about $10.2 billion, and making certain assumptions for owner-occupied, primary residences
and tenants primary residences, and applying the 50% tax rebates under the bill, total expenditures should reach at least $3.2 billion annually. These expenditures would grow annually along with any growth in local school property taxes.
The Governor's Budget proposal for FY 2006 indicates that approximately $900 million is attributable to property tax relief from the Homestead Rebate program, the senior property tax "freeze" program, and the gross income tax deduction for property taxes. More than half of the State funds saved under these programs will reduce the amount of surcharge revenue that will be required to pay the NJ SMART rebates. About $500
million of these resources would be used to offset the $3.2 billion in annual NJ SMART payments. Accordingly, the gross income tax surcharge would have to raise at least between $2.5 billion and $2.6 billion annually, growing along with the growth in local
school property taxes. For the first two NJ SMART rebate payments in August and November 2005 will be offset by the $500 million in avoided homestead rebate appropriations and a reduced part-year, lower rate 2005 surcharge.
Make the SMART Bill the Law in New Jersey
- Reapportionment of school taxes based on the ability to pay
is key to the success of meaningful school tax reform
The SMART Bill calls for the following:
- The State pays 50% of school taxes for homeowners and renters
- 50% of school taxes are shifted to a State school income tax adjustment dedicated to fund school taxes
- Every taxpayer will pay their fair share of school taxes based on their ability to pay
It Should be noted that:
- School taxes collected as part of property taxes plus income taxes = $18 billion
- With the SMART Bill this total remains the same
- The Average homeowner will have their School plus Income tax cut 30%
- Commercial property taxes are unaffected
Comments
- The SMART Bill redistributes school taxes fairly without increasing the amount of taxes collected
- With the SMART Bill - All of the state’s taxpayers pay their fair share of educating our 1.4 million students
- Property-based school taxes have risen at an uncomfortable rate during the last decade. If we allow this trend to continue and school taxes increase at their present rate, we can expect that a significant number of property owners, unable to pay their taxes, may be forced to forfeit their homes.
Public resentment, coupled with insufficient funds, may cause a
school-funding crisis.
Assembly Bill No. A-1284
Senate Bill No. S-187
Sponsored by: Assemblyman Louis Manzo and Senator Joseph Doria
This bill, designated the NJ SMART (New Jersey Save Money and Reform Taxes) Act, establishes an NJ SMART rebate to effectively refund 50% of all homestead public school property taxes for all homestead owners and residential tenants, and establishes
a gross income tax surcharge to largely fund this substantial property tax relief.
The NJ SMART Act shifts 50% of school taxes to a State school income tax surcharge dedicated to refund to homestead owners and tenants 50% of the school taxes they pay as part of their property taxes or rent.
The NJ SMART rebate for most taxpayers will equal or exceed the proposed gross income tax surcharge and pay dramatic refunds of their school property tax payments.
All homestead owners who pay property taxes on that primary residence will receive school property tax relief on that homestead. Residential tenants will receive relief equal to 50% of 9% of their rent payments.
NJ SMART rebates for homeowners will be paid through electronic funds transfer made by the Director of the Division of Taxation to the local property tax account maintained by the local tax collector for the homestead of the claimant. The NJ SMART rebate amounts will be paid through these quarterly transfers on the dates that the quarterly payments of local property taxes are due. This will allow for the local property tax bill presented to claimants to show the expected offsets if claims for the SMART
rebates are approved in a timely manner and the information is forwarded to the local tax collector before local property tax bills are prepared. Residential owners may elect to receive these quarterly payments directly. The SMART rebate amounts for residential tenants will be paid directly to the claimant in one payment or claimants may elect that NJ SMART rebates be paid in two payments directly transferred to a personal bank account that they designate.
Seniors age 65 or over and disabled homeowners and tenants who received up to the maximum $1,200, $800 or $500 homestead rebate or up to the maximum $875 tenant
rebate during 2004 will be allowed SMART rebates of at least the amounts they received during 2004 if they continue to meet the eligibility requirements and have the same homestead. These 2004 maximum amounts will be subject to annual cost of living
adjustments for tax year 2005 and thereafter as is set forth in the homestead rebate statute. In this way the NJ SMART rebate program will not eliminate the level of property tax relief of the Homestead Rebate program paid out in 2004 that was directed to senior and disabled homestead owners under certain income limits. Beginning with taxable year 2005, the costs to cover the property tax deduction under the gross income tax and the homestead property tax reimbursement will also be reduced to the extent that 50% of school property taxes that are paid for under the NJ SMART rebate Act will not be duplicated under those more limited tax relief programs.
The State school income tax surcharge will be established annually by the State Treasurer as a uniform percentage of each New Jersey gross income taxpayer's adjusted gross income tax liability. The surcharge tax liability will be based upon gross income tax liability that would be due without allowing for claims of gross income tax credits. Thus, the surcharge will be based upon an underlying progressive State income tax structure. However, no State school income tax surcharge will be imposed upon taxpayers with taxable gross income of $30,000 or less. Also the uniform statewide rate for the surcharge to be determined annually by the State Treasurer will be adjusted for any amount of income that exceeds $500,000 so that the surcharge is imposed on liability assessed on that amount
based on the prior 6.37% marginal rate, and is not based on the "half-millionaire's" rate of 8.97% now imposed upon that income.
The rate of tax under the surcharge will be set to raise only enough revenue, after consideration of funds available from the savings from the elimination of the reduced property tax relief programs, to pay only for 50% of each residence's school property taxes. That amount will for most taxpayers under the progressive gross income tax structure more than match the surcharge they will pay and provide substantial payments that may be paid directly towards homestead school property tax bills.
The surcharge will commence with the start of a calendar year, except for a partial taxable year 2005 surcharge which will start on July 1 in order to pay for the distribution of the first two quarterly NJ SMART rebate payments for August 1, 2005 and November 1, 2005. The homestead school tax payments made during the prior year, and property taxes paid through rent, will qualify the homestead property taxpayer or tenant to apply
for the NJ SMART rebate beginning during the first year that the surcharge is being paid.
The NJ SMART rebate that will be approved based upon that application will reduce the next four quarterly property tax payments beginning August 1. Homestead property taxpayers and residential tenants who pay no gross income tax will also file an application under the same schedule.
The basic proposals set forth in the NJ SMART Act were developed by the Citizens for School Tax Reform organization and have been endorsed by the New Jersey Coalition for Property Tax Reform. The mission of the New Jersey Coalition for Property Tax Reform is to advance and promote the removal of school taxes from local property tax, a regressive tax, to a progressive state income tax, while maintaining the current
system of local control of public education.
Under this bill the State would provide significant annual property tax rebate payments directly to local property tax accounts in order to reduce individual homeowners property tax payments. State payments would be funded by reductions in previously
existing property tax relief programs and an adjustable annual surcharge on certain gross income tax liabilities. Revenues and resources are designed to match anticipated expenditures.
Based on Tax Year 2004 data that indicates statewide school property taxes of about $10.2 billion, and making certain assumptions for owner-occupied, primary residences
and tenants primary residences, and applying the 50% tax rebates under the bill, total expenditures should reach at least $3.2 billion annually. These expenditures would grow annually along with any growth in local school property taxes.
The Governor's Budget proposal for FY 2006 indicates that approximately $900 million is attributable to property tax relief from the Homestead Rebate program, the senior property tax "freeze" program, and the gross income tax deduction for property taxes. More than half of the State funds saved under these programs will reduce the amount of surcharge revenue that will be required to pay the NJ SMART rebates. About $500
million of these resources would be used to offset the $3.2 billion in annual NJ SMART payments. Accordingly, the gross income tax surcharge would have to raise at least between $2.5 billion and $2.6 billion annually, growing along with the growth in local
school property taxes. For the first two NJ SMART rebate payments in August and November 2005 will be offset by the $500 million in avoided homestead rebate appropriations and a reduced part-year, lower rate 2005 surcharge.
Make the SMART Bill the Law in New Jersey
- Reapportionment of school taxes based on the ability to pay
is key to the success of meaningful school tax reform
The SMART Bill calls for the following:
- The State pays 50% of school taxes for homeowners and renters
- 50% of school taxes are shifted to a State school income tax adjustment dedicated to fund school taxes
- Every taxpayer will pay their fair share of school taxes based on their ability to pay
It Should be noted that:
- School taxes collected as part of property taxes plus income taxes = $18 billion
- With the SMART Bill this total remains the same
- The Average homeowner will have their School plus Income tax cut 30%
- Commercial property taxes are unaffected
Comments
- The SMART Bill redistributes school taxes fairly without increasing the amount of taxes collected
- With the SMART Bill - All of the state’s taxpayers pay their fair share of educating our 1.4 million students
- Property-based school taxes have risen at an uncomfortable rate during the last decade. If we allow this trend to continue and school taxes increase at their present rate, we can expect that a significant number of property owners, unable to pay their taxes, may be forced to forfeit their homes.
Public resentment, coupled with insufficient funds, may cause a
school-funding crisis.