| LESSON ONEFirst Remember that:THE LOCAL
| |
| | This example incorporates some of the
|
| PROPERTY TAX in New Jersey is in fact a
| |
| | lessons we have already learned.In
|
| LOCAL TAX.This means that the tax is
| |
| | Jerry's Hometown:The Total Amount to be
|
| assessed and collected at the local
| |
| | Raised by Taxation is $300,000The
|
| municipal level for the support of:LOCAL
| |
| | True Value of All Real Property is
|
| SCHOOLSMUNICIPAL GOVERNMENTCOUNTY
| |
| |
|
| GOVERNMENTTHE STATE RECEIVES NO PORTION
| |
| | $60,000,000The Assessor Uses an
|
| OF THESE PROPERTY TAXES.As a matter of
| |
| | Assessment Ratio of
|
| fact the State pays out 48¢ of every
| |
| | X 100%Thus the Total
|
| State revenue dollar collected to
| |
| | Assessed Valuation Taxable is
|
| counties, municipalities and schools in
| |
| | $60,000,000The Tax Rate then is
|
| some form of State Aid. In 1961, some 44
| |
| | ($300,000)/ - $5 per $100 of Assessed
|
| years ago, the State paid out 43 cents of
| |
| | Valuation$60,000,000)Accordingly, if
|
| every State revenue dollar collected.In
| |
| | Jerry's House and Lot have a market value
|
| FY 2005 the State budgeted approximately
| |
| | of $300,000And the assessor
|
| $12,465.6 million in State funding for
| |
| | uniformly applies an Assessment Ratio of
|
| property tax relief programs for the
| |
| | 100% 100%
|
| following purposes:($Millions)Schools
| |
| | (Note: All New Jersey County Boards Of
|
| Aid $8,657.3Municipal Aid
| |
| | Taxation Require 100% Ratio)Jerry's house
|
| 1,757.0Other Local Aid
| |
| | will be Assessed at: $300,000By
|
| 716.0Direct Taxpayer Relief
| |
| | applying the Tax Rate in Jerry's Town
|
| 1,335.3TOTAL $12,465.6LESSON TWONext we
| |
| | X $5.00JERRY'S TAX BILL WILL BE
|
| must understand that:THE LOCAL PROPERTY
| |
| | $ 1,500LESSON SIX (Continued)NOW,
|
| TAX in New Jersey is a RESIDUAL TAX.A
| |
| | assuming 10 years have passed and
|
| Residual Tax is one which is levied to
| |
| | property values have doubled in value
|
| raise the amount of money required over
| |
| | due to property inflation, And, assuming
|
| and above the total revenues available
| |
| | that the Budgets remained the same:And,
|
| from other sources.For example, in
| |
| | the Total Amount to be Raised by Taxation
|
| Jerry's Small Town, total budget
| |
| | is still. $300,000And,
|
| requirements are:For Local Schools $
| |
| | with the Assessor assessing at 100% of
|
| 149,000For Municipal Services
| |
| | true value.
|
| 175,000For County Services
| |
| | (NOTE: Reducing the ratio to 50% as
|
| 75,000Other Items
| |
| | happens in states, other than New Jersey,
|
| 1,000TOTAL BUDGET REQUIREMENTS
| |
| |
|
| $400,000Available Revenues to offset
| |
| | would mathematically just result in a
|
| these requirements:State School Aid
| |
| | doubling of the tax rate.)And, property
|
| $ 75,000Other Revenues
| |
| | inflation has increased the town's total
|
| 25,000(Parking Meters, Licenses,Court
| |
| | Assessed Valuation Taxable,
|
| Fines, Etc.)TOTAL AVAILABLE REVENUES
| |
| | so after a revaluation with a 100% ratio
|
| $100,000AMOUNT TO BE RAISED BYLOCAL
| |
| | the town's total assessed valuation
|
| PROPERTY TAXATION $300,000This
| |
| | taxable is now. $120,000,000The Tax Rate
|
| $300,000 is the RESIDUAL amount to be
| |
| | is then ($300,000) / - $2.50 per $100 of
|
| raised by Taxation after giving effect to
| |
| | Assessed Valuation(120,000,000)
|
| all other sources of revenue.LESSON
| |
| | After the Revaluation the total tax base
|
| THREENow we must also understand that:THE
| |
| | in the town doubled in value.Since all
|
| LOCAL PROPERTY TAX in New Jersey is an AD
| |
| | assessments are at True Value,Jerry's
|
| VALOREM TAX.Don't let that fancy name
| |
| | House after the revaluation will now be
|
| frighten you.An AD VALOREM tax simply
| |
| | assessed at $ 600,000By applying the Tax
|
| means that each taxpayer shares in the
| |
| | RATE of $2.50 per $100 of value X
|
| total tax burden of his town in the
| |
| | $2.50JERRY'S TAX BILL WILL STILL BE
|
| direct proportion as the value of his
| |
| | $ 1,500Thus, we learn
|
| property bears to the total value of all
| |
| | that if the Amount to be Raised by
|
| the property in his town.AD VALOREM means
| |
| | Taxation remains the same:Tax Rates are
|
| each taxpayer pays according to the value
| |
| | high when Assessment Ratios are low in
|
| of the property he owns. The amount of
| |
| | some states other than New Jersey.
|
| property he owns is used as a yardstick
| |
| | Conversely, Tax Rates are low when
|
| in determining his ability to pay.For
| |
| | Assessment Ratios are high in some states
|
| Example:Jerry owns a house and lothaving
| |
| | other than New Jersey.The amount of a
|
| a market value of $ 300,000The total
| |
| | property owner's Tax Bill is not affected
|
| market value of all propertyin Jerry's
| |
| | by Assessment Ratios or by Tax Rates.The
|
| towns is
| |
| | amount of an individual's tax bill is
|
| $60,000,000ACCORDINGLY:Jerry's share of
| |
| | determined by The Amount to be Raised by
|
| the total LocalProperty Tax base is
| |
| | Taxation, and by the proportionate value
|
| $300,000
| |
| | of his property as it bears to the total
|
| $60,000,000$300,000 equals ½ of 1% of
| |
| | value of all property in his
|
| the total property tax base of
| |
| | municipality.LESSON SEVENWhat is meant by
|
| $60,000,000.Reducing this to a decimal,
| |
| | EQUALIZATION?The term EQUALIZATION as
|
| Jerry's share of the total Local Property
| |
| | commonly used has a twofold
|
| Taxes in his community is ½ of 1%, or
| |
| | meaning:INTER-DISTRICT EQUALIZATION,
|
| .005.This percentage is usually shown as
| |
| | i.e., Equalization among taxing
|
| a Tax Rate charged for each $100 of
| |
| | districts, has as its purpose the
|
| Assessed Valuation. (See Lesson Four)AD
| |
| | determination of the true wealth of every
|
| VALOREM means nothing more than
| |
| | municipality to the end that each
|
| PROPORTIONATE OR FAIR SHARE.REVIEWSo far
| |
| | receives a fair amount of State School
|
| we have learned that the Local Property
| |
| | Aid and pays an equitable share of the
|
| Tax is a -LOCAL TaxRESIDUAL TaxAD VALOREM
| |
| | costs of county government.Inter-district
|
| TaxLOCAL TAX levied at the local
| |
| | equalization is substantially an
|
| municipal level for the support of local
| |
| | accomplished fact in New Jersey.The State
|
| schools, municipal and county
| |
| | School Aid Equalization Table, which is
|
| governments.RESIDUAL TAX levied to make
| |
| | based on a continuing statewide
|
| up the difference between available
| |
| | sales-assessment ratio study, provides
|
| miscellaneous revenues and budget
| |
| | for the equitable apportionment of the
|
| requirements.AD VALOREM TAX, which means
| |
| | costs of county government among the
|
| that each taxpayer pays his proportionate
| |
| | taxing districts within the several
|
| share based on the value of the property
| |
| | counties.This Table is also used as the
|
| he owns.LESSON FOURNow, we must learn the
| |
| | basis of apportioning certain costs of
|
| answer to the question:WHAT IS THE
| |
| | Joint, Consolidated and Regional School
|
| MEANING OF TAX RATE?TAX RATE is the
| |
| | Districts.INTRA-DISTRICT EQUALIZATION,
|
| number of dollars per $100 of Assessed
| |
| | i.e., Equalization within a municipality,
|
| Valuations which must be applied to the
| |
| | means equitable tax treatment among
|
| assessed valuation of all property in a
| |
| | property owners of the same class of
|
| taxing district in order to produce the
| |
| | property and equitable tax treatment
|
| amount of money required to support
| |
| | among property owners of different
|
| school, county and municipal budgets.TAX
| |
| | classes of property.This simply means
|
| RATE is another method used to arrive at
| |
| | that homeowners having homes of similar
|
| the amount of each taxpayer's
| |
| | value are assessed alike - that is,
|
| proportionate share of local taxes.The
| |
| | Jerry's home and your home, having an
|
| TAX RATE is determined by a simple
| |
| | equal value, are assessed at the same
|
| arithmetic calculation similar to the
| |
| | value. Similarly, Jerry's place of
|
| method illustrated in Lesson Three.Total
| |
| | business, having the same value as other
|
| Amount to be Raised by Taxation -
| |
| | places of business, is assessed at the
|
| $300,000Total Value of all property in
| |
| | same value.This is known as
|
| Town - $60,000,000$300,000
| |
| | Intra-Municipal Equalization, and is the
|
| $60,000,000 = .05The Tax Rate
| |
| | very core of the principle of Ad Valorem
|
| is then 5¢ per $1 of Assessed
| |
| | Taxation.Intra-Municipal Equalization is
|
| Valuationor$5.00 per $100 of Assessed
| |
| | generally attained by carrying out an
|
| ValuationsEXAMPLE:Jerry's house and lot
| |
| | overall professional Revaluation Program
|
| havean Assessed Valuation of
| |
| | where all properties are re-evaluated as
|
| ------------------ $300,000Tax Rate per
| |
| | to their market value or 100%
|
| $100 ofAssessed Valuation
| |
| | value.LESSON EIGHTWhat is meant by
|
| ------------------------- X
| |
| | REVALUATION?The REVALUATION of a taxing
|
| $5.00Jerry's Tax Bill is
| |
| | district is accomplished by having an
|
| --------------------------- $
| |
| | appraisal made of every piece of real
|
| 1,500.00LESSON FIVEWhat is the meaning of
| |
| | property within the taxing district by a
|
| -TRUE VALUEASSESSMENT RATIOASSESSED
| |
| | competent professional revaluation
|
| VALUATIONTRUE VALUE means market value -
| |
| | firm.CARRYING OUT A HIGH QUALITY
|
| the amount a parcel of real property
| |
| | REVALUATION PROGRAM involves the
|
| would sell for at a fair and bona fide
| |
| | application of uniform standards and
|
| sale.ASSESSMENT RATIO is that percent of
| |
| | procedures in arriving at equitable
|
| True Value used by the assessor in making
| |
| | appraised values for all parcels of
|
| up his assessment rolls as prescribed by
| |
| | property in the taxing district.THE
|
| his/her County Board of Taxation).In New
| |
| | PURPOSE OF A REVALUATION PROGRAM is to
|
| Jersey assessors use the statutory 100%
| |
| | secure the basis for attaining uniform
|
| ratio or Full True market value in making
| |
| | and equitable assessments on all
|
| up their assessment rolls; assessors in
| |
| | properties within the same classification
|
| others states use assessment ratios or
| |
| | and as among the several classifications
|
| percentages less than 100%.ASSESSED
| |
| | of property in order to assure an
|
| VALUATION or ASSESSMENT is the value
| |
| | equitable apportionment of the
|
| placed on each parcel of property by the
| |
| | increasingly heavy local property tax
|
| assessor as indicated above; it is
| |
| | burden among all the taxpayers within a
|
| determined by the use of True Value or
| |
| | taxing district.PROFESSIONAL REVALUATION
|
| some percentage thereof.REVIEWIn Lessons
| |
| | PROGRAMS are carried out in about 50
|
| One and Two we learned that:Total Budgets
| |
| | municipalities a year.THE GOVERNING
|
| less available revenues result in the
| |
| | BODIES of those municipalities that have
|
| Residual Amount to be raised by taxation
| |
| | regularly revalued have faced up to their
|
| which is the total tax bill.It follows
| |
| | obligation to treat all property
|
| then that the amount to be raised by
| |
| | taxpayers uniformly and equitably.:
|
| taxation is a primary factor in
| |
| | Gerald 'Jerry' Dowgin "The Property Tax
|
| determining the amount of each individual
| |
| | Doctor" and the author of the Homeowner's
|
| property owner's tax bill.In Lesson Three
| |
| | Assessment Review Guide ( a former tax
|
| we learned that:Local Property Taxes are
| |
| | assessor worked in the field of public
|
| apportioned among property owners
| |
| | finance at the State and local levels in
|
| according to the value of each individual
| |
| | New Jersey for more than three decades
|
| taxpayer's property in proportion to the
| |
| | until his retirement in 2001. As a
|
| value of the property of all taxpayers.We
| |
| | Supervising Tax Analyst in the Office of
|
| learned that this method of taxation is
| |
| | Research and Statistics in the Division
|
| called AD VALOREM taxation.In Lesson Four
| |
| | of Taxation in the New Jersey Department
|
| we learned that:Tax Rate is the dollar
| |
| | of Treasury he worked principally on
|
| amount per $100 of assessed valuation
| |
| | local property tax issues. Then he
|
| which must be raised to support local
| |
| | joined the Office of Legislative Services
|
| budgets.In Lesson Five we learned
| |
| | (OLS) in 1983 and served as the Secretary
|
| that:Assessed Valuation is the true value
| |
| | to the New Jersey Property Tax Assessment
|
| or percentage of true value placed on
| |
| | Study Commission for four years. While
|
| each parcel of property by the assessor.
| |
| | working in the OLS, Local Government
|
| This is the basic factor which implements
| |
| | Section he researched, drafted, and
|
| the AD VALOREM principle of
| |
| | estimated the cost of the Senior Property
|
| taxation.LESSON SIXWhat are the
| |
| | Tax Freeze Bill which was signed onto law
|
| relationships among:Total Amount to be
| |
| | and worked on legislation that became law
|
| Raised by TaxationTax RateAmount of the
| |
| | that virtually stopped the tax assessment
|
| Individual Taxpayer's BillThe
| |
| | practice of "Spot Assessments" in New
|
| relationship among these factors can best
| |
| | Jersey that had treated many property
|
| be illustrated by the following example.
| |
| | taxpayers unfairly.
|
