Why are NJ housing taxes higher than NYC? (Madison: real estate, rent)
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New York City and New York State have one of the largest and most valuable central business districts in the world--Manhattan. Wall street firms, Madison Avenue, etc. generate enormous profits and consequently taxes that allows property taxes to remain relatively low, or at least lower than New Jersey.
NYC income tax of 3.65% PLUS prop taxes gets you the NYC public school system, which for 90% of the city is not somewhere most parents would choose for their kids. Thus, NYC has probably more private schools per square mile than anywhere in the country......so you pay all those taxes and are forced to send kids to private school. Realize that private school in NJ is a choice that upper mid/wealthy may choose. In NYC many lower mid/mid are FORCED to send their kids to private schools if they want to give their kids a chance at a quality education.
So lets do the math. (I still live in a NYC borough). $600k house prop tax is about $5-6k. NYC income tax on say $100k earnings another $3,600. Now you have to send two kids to private grammar school......another $6-8k depending on school. On the low end your looking at $20k all in bw prop/income tax/schooling. Forget it when those kids get to HS. That number jumps to $35k or above.
Now you know why every other post on these boards is people looking to leave boroughs of NY in search of good schools and housing. Among those who I went to HS with here in NY, I honestly don't know anyone who has stayed. I'm sure some did....I just don't know any. Same with friends that have had kids. Everyone has fled to Westchester, CT, NJ, LI. People vote with their feet.
New York imposes an INCOME tax at both the State AND City level. New Jersey only imposes a State level income tax, and it's usually lower than the New York State tax. To make up for that difference, they slam you on real estate tax. If you notice, it seems like only large cities like NYC and Philadelphia impose an income tax. It's probably because its more complicated to handle than a real estate tax. Since New Jersey is made up of a hundred small towns (really glorified neighborhoods), it simpler for them to just tax real-estate. They know you have a quarter-acre of property, therefore you owe $10k in real estate tax. Also, in NJ most people think of their real estate tax as basically private school tuition. It's a really big deal if you live on this side of the street versus the other side because you could live in a completely different town with a different school system. This leads to drastic neighborhood changes on the town lines. And the RIDICULOUS number of small towns is probably inefficient considering that you have a different mayor, police chief, fire chief and school chancellor every 2 miles! And the nice towns overspend. The towns that don't need a lot of police are the ones that have really jacked up squad cars because the town is rich.
Some quick Turbotax numbers:
A married couple in NYC making $100k pays $7.5k in total State and City tax.
If you make $200k in NYC you pay $18.5k in total State and City Tax.
A $500k house pays $4k per year in NYC real-estate tax.
A married couple in NJ making $100k pays $2.5k in NJ State tax, no city tax.
If you make $200k in NJ, you pay $8.5k in NJ State tax, no city tax.
A $500k house pays $20k per year in NJ real-estate tax.
NYC income tax of 3.65% PLUS prop taxes gets you the NYC public school system, which for 90% of the city is not somewhere most parents would choose for their kids. Thus, NYC has probably more private schools per square mile than anywhere in the country......so you pay all those taxes and are forced to send kids to private school. Realize that private school in NJ is a choice that upper mid/wealthy may choose. In NYC many lower mid/mid are FORCED to send their kids to private schools if they want to give their kids a chance at a quality education.
So lets do the math. (I still live in a NYC borough). $600k house prop tax is about $5-6k. NYC income tax on say $100k earnings another $3,600. Now you have to send two kids to private grammar school......another $6-8k depending on school. On the low end your looking at $20k all in bw prop/income tax/schooling. Forget it when those kids get to HS. That number jumps to $35k or above.
Now you know why every other post on these boards is people looking to leave boroughs of NY in search of good schools and housing. Among those who I went to HS with here in NY, I honestly don't know anyone who has stayed. I'm sure some did....I just don't know any. Same with friends that have had kids. Everyone has fled to Westchester, CT, NJ, LI. People vote with their feet.
My brother in law paid $30k tuition for kindergarten for his son, and the cost went up from there. And they put these little kids through rigorous testing, and the competition is fierce. They even had a child psychologist interview every applicant.
New York imposes an INCOME tax at both the State AND City level. New Jersey only imposes a State level income tax, and it's usually lower than the New York State tax. To make up for that difference, they slam you on real estate tax. If you notice, it seems like only large cities like NYC and Philadelphia impose an income tax. It's probably because its more complicated to handle than a real estate tax. Since New Jersey is made up of a hundred small towns (really glorified neighborhoods), it simpler for them to just tax real-estate. They know you have a quarter-acre of property, therefore you owe $10k in real estate tax. Also, in NJ most people think of their real estate tax as basically private school tuition. It's a really big deal if you live on this side of the street versus the other side because you could live in a completely different town with a different school system. This leads to drastic neighborhood changes on the town lines. And the RIDICULOUS number of small towns is probably inefficient considering that you have a different mayor, police chief, fire chief and school chancellor every 2 miles! And the nice towns overspend. The towns that don't need a lot of police are the ones that have really jacked up squad cars because the town is rich.
Some quick Turbotax numbers:
A married couple in NYC making $100k pays $7.5k in total State and City tax.
If you make $200k in NYC you pay $18.5k in total State and City Tax.
A $500k house pays $4k per year in NYC real-estate tax.
A married couple in NJ making $100k pays $2.5k in NJ State tax, no city tax.
If you make $200k in NJ, you pay $8.5k in NJ State tax, no city tax.
A $500k house pays $20k per year in NJ real-estate tax.
See the difference?
I pay nowhere near 20K in real estate tax on my NJ house which is in that price range. I'm at around 8.
My fam has house in NYC around that range and pay 6K.
My brother in law paid $30k tuition for kindergarten for his son, and the cost went up from there. And they put these little kids through rigorous testing, and the competition is fierce. They even had a child psychologist interview every applicant.
Yeah- friends were looking @ Horace Mann & Ethical Cultural School, can't imagine what those bills would be, but Trump's grandkid and Jeff Gordan's kid was in their little one's class.
On Staten Island, the good Catholic schools cost 8-9K per kid, the crappy ones where it's basically public school with uniforms are like 5K per kid. The HS can go upto 13 or so; and they are nowhere in the league of the better NJ public schools.
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