New Jersey Property Taxation and Individual Rights

The assessment of real estate for taxation is the main way NJ allocates the cost of local government among those who share in its benefits.

The intent and goal of tax laws is (or at least should be) the equal distribution of that cost. However, no government system is, or can be, perfect. Some level of inequity is virtually inevitable.

If that is the case, which risk is preferable – the risk of compelling one individual to pay more than their fair share of taxes, or the risk that many people are paying a little more because an individual is paying something less than their fair share? Or put differently, do you favor the right of the individual to not pay more than their fair share, or the right of many?

For many fundamental freedoms, the right of the individual that is given priority. We tolerate speech we don’t agree with because we believe in the free exchange of ideas. We accept different religious opinions and expressions to protect the right of the individual to different beliefs. We have an elaborate system of justice designed to protect the rights of the accused and guard against punishing an innocent person. In so many aspects of life, the individual’s rights are protected, despite the cost to society.

So, to go back to my question, do we prioritize individual rights in NJ property taxation? The answer, in my opinion, is a resounding no. Many things we’ve discussed – spot assessments, reverse tax appeals, added assessments – are all aimed at ensuring properties pay their fair share at an individual level.

New Jersey, as well as other jurisdictions, does allow taxpayers to challenge their assessments, but even then, the deck is stacked heavily against the taxpayer. High burdens of proof, strict filing deadlines, procedural and tax payment requirements and relaxed refunding rules all limit the effectiveness of the process to protect the right to equal tax treatment.

Methodologies to attack the problem of underassessment at the district-wide or even neighborhood-wide level are underused because of cost, political unpopularity and small assessing departments. Where they are used, it is done in a somewhat arbitrary fashion and with an eye towards defeating the individual right to challenge a tax assessment.

What do you think – do we have it right? Is it better to allow an individual taxpayer to face over assessment rather than let them escape taxation, or would it be better to prioritize ensuring that no one pays more?