Upset About U.S. Taxes? Focus on New Jersey’s Bad Example

By J. LINDSAY FULLER | Sep 26, 2018

I read Ken Bank’s letter (“Burdensome Taxes,” 9/19) in which he took certain politicians to task about his limitations on how much in state and local taxes he would be able to deduct on his federal tax return. He laid the major blame at the feet of President Trump and one of our local congressmen, Tom MacArthur. Mr. Bank has misplaced his ire.

The tax reform that was recently passed by Congress and signed by the president was a long, drawn-out process where many alternatives were discussed, measured and either moved forward or set aside. One of those, and one of the options that took the most time to finally come to a conclusion on, was the deductibility of state and local taxes on a taxpayer’s federal tax return.  Please remember that many of the tax reform options disallowed the deduction of all state, local and school taxes. You may wish to know that our Congressman MacArthur was the prime mover in the House to get that changed or else you, Mr. Bank, would have had no tax deduction for your incredible New Jersey taxes.

The federal tax system applies to everyone in the U.S. plus American citizens who live overseas. It is certainly not a simple system. It has many portions that take into account the costs that taxpayers face in different parts of the country. However, there are states that operate on a very economical basis, and then there are those that have lost all control over their internal state spending. New Jersey falls into that latter group and has been there for decades regardless of which political party might be currently holding sway. 

If New Jersey can’t get its finances under control, why should citizens of states that operate in far more economical manners subsidize New Jersey citizens on their federal taxes? I think that perhaps you, Mr. Bank, should be raising Cain with your New Jersey state, county and local elected officials, along with your local school boards, to find out why your costs for their “services” so far exceed the other states in this country. I’m sure you will have to wait for a decent answer, but you should be asking the correct questions of the correct people.

Let me provide a simple comparison. Ocean County has a tourism-oriented economy. Our major industry is made up of people who come during the spring, summer and fall seasons to take advantage of our woodlands, lakes, bays and beaches plus our major asset, the Atlantic Ocean. Thirty years ago, the Jersey Shore was the prime destination for many families from the Mid-Atlantic each and every summer. 

However, we now have heavy competition, and one of the strongest competitors is the northern Outer Banks of North Carolina. These run from Hatteras Village up to Corolla on the barrier islands similar to our Long Beach Island. But taxpayers in North Carolina have a far different financial situation to live under. And it is far more flexible and more cost effective for them than ours is for us.

The newer homes in the northern Outer Banks are easily as attractive and comfortable as those on LBI. However, the market costs for a non-waterfront five-bedroom home on pilings with lovely decks and possible a splash pool in the back yard costs between $650,000 and $800,000. Their property taxes? About $3,500. Oh, by the way, the northern Outer Banks have a 17- to 20-week routine rental season versus our nine weeks. 

A similar house on LBI would cost about $1.2 million minimum to buy. The property taxes? Hang on and take a seat. They would likely be in the neighborhood of $15,000 annually. 

If you line up officials from the two areas and ask why there is such a difference, New Jersey officials will start throwing the crap about how our school systems are so much better than those in “hicktown” North Carolina. Well, I have quite a bit of insight into this differential, and the answer is not what New Jersey officials would like to hear.

I grew up in what was then fairly rural Burlington County. I went to a private junior and senior high school, with a widely admired reputation. I received an appointment to the U.S. Naval Academy so we at least learned how to take standardized tests. Unfortunately, the year I would have entered the academy was the last year where incoming freshmen had to meet the Navy’s flight physical standards, including their uncorrected vision. My left eye then was 20/30, so I did not attend the Naval Academy. I went to North Carolina State University and studied engineering. 

I had been thoroughly inoculated with the snotty Northeast idea that people from the South didn’t hold a candle to the people from the Northeast. Did I have a rude awakening! 

When I got to N.C. State, the first thing incoming freshmen had to do was to take placement tests in all sorts of subjects. I found that every single freshman in my very large dorm who came from North Carolina had already had at least one full year of calculus. Not one single freshman from above the Mason-Dixon Line had any calculus whatsoever, including me. As a freshman, I had two dorm roommates, both from small fabric mill towns in western North Carolina who had attended tiny, rural high schools where the bus rides were over one hour each way. They both had had a full year of calculus in high school. Thank God. I would have never mastered calculus without my roommates’ patient help.

I also quickly realized that the roads in North Carolina were in far better shape than New Jersey’s roads. Yes, they did not have the amount of freeze/thaw damage the Northeast can suffer in winter. However, their roads were banked properly in the turns, marked far better and in general were a total pleasure to drive on with few, if any, potholes. 

So now we have two variations in how to run a state. One has used its head, controlled its costs, offers a high level of value while the other spends, spends and spends. Is it the fault of the federal government or the fault of New Jersey voters allowing their legislators a totally free hand that constantly spends with few, if any, controls? And then you, Mr. Bank, want taxpayers in other parts of the U.S., areas that have far lower costs, to subsidize your costs?

It’s good that you are complaining since we need more people who will. But let’s work together and against the jackass politicians who promise everything without regard to what the area can afford. 

Oh, they say, “We’ll just ‘tax the rich.’” New Jersey is losing the “rich” by the thousands each and every year. This is not hearsay. I have worked in the financial services industry for decades. I have dozens of clients who have moved their domiciles from New Jersey to other states, and their average overall cost reduction per year exceeds $200,000 due to tax savings and other cost-of-living expenses. That, sir, is not chickenfeed.

So, Mr. Bank, you want to save a little on your federal taxes. How about saving even more than your targeted federal tax savings by reducing what you pay for New Jersey state income, sales and inheritance taxes plus save on county, local and school taxes? I suggest that if we could pull that off, our state, county, local and school entities would also be far better off. How about we really persevere and give it a try? You know, here in Southern Ocean County, we are technically in South Jersey, so we may even be able to adopt a bit of a southern accent.

J. Lindsay Fuller lives in Moorestown, N.J., and Beach Haven.


Comments (1)
Posted by: eric ditzenberger | Oct 04, 2018 10:28

Hi Mr. Fowler,

Enjoyed reading your commentary. We had the pleasure of visiting low tax Idaho last year. The highways and back roads were some of the best I've ever traveled. Ironically, listening to a local talk radio station the guests were exploring ways to fix the state's "crumbling" infrastructure. Different standards. Sad that New Jersey citizens put up with this.


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