State politicians and trade groups – even those that have traditionally leaned to the right in their economic views, such as the New Jersey Business & Industry Association – have all railed against the new Tax Cuts and Jobs Act, saying it will ultimately drive down home prices and cause people to move out of New Jersey.
“This law is basically a ‘screw you’ to the Northeastern part of the United States” said Piscataway Mayor Brian Wahler. He asserts that putting a cap on property tax deductions will force home prices to go down, and thereby decrease tax revenue of local municipalities.
The cap, part of the most sweeping tax reform package since Ronald Reagan was president, hits New Jersey especially hard, since it is the state with the highest property tax rates in the country, despite a temporary decrease in individual, middle tax rates.
“Lowering property values will lower the services that municipalities provide, such as police and fire, and decrease the quality of education,” Wahler told NJBIZ. “All these alleged tax breaks will expire after seven years so Congress can meet its budget thresholds.”
Robert Jackson, mayor of Montclair Township, warned his town will get hit hard by decreasing home values.
“Essex and Union are going to get whacked. [A] 10 1/2 percent property-value decrease is the estimate. … I don’t care whether you think [President] Trump walks on water or, it doesn’t matter, nobody wants to lose 10 to 15 percent of their property values. … Nobody can afford to take this hit,” Jackson told Montclair Local.
Tom Bracken, CEO of the New Jersey Chamber of Commerce, agreed, emphasizing the new tax bill will be bad for businesses because it will make the state unaffordable for individuals and families.
“There is no question that it will exaggerate New Jersey's very real and significant problems of affordability, out-migration and business competitiveness,” Bracken said. “We were beginning to make progress on these issues, but our positive momentum is about to be reversed in the wake of this legislation.”
Added Michele Siekerka, NJBIA’s CEO: “New Jersey is the largest net losers in this new tax law. We have the highest property taxes in the nation. The reality with this new law is that a lot of folks are just going to move right across the border to Pennsylvania because the cap on property tax deductions.”