Supporters of a sweeping new property tax cut proposal for New Jersey seniors say a big goal is to entice older residents across the state to stay by making their lives here more affordable — so they won’t skip out and spend their golden years elsewhere.
But while the legislation is designed to effectively slash property taxes in half every year for most homeowners 65 and older, the majority of older residents in the Garden State’s four largest cities would be among thousands of seniors who’d get relatively little direct help because they rent instead of own.
At the same time, Alpine — one of the state’s wealthiest zip codes — is among a few upscale places that would see a large swath of their population get tax breaks, because most residents of that ritzy Bergen County suburb are seniors who own their property.
Those are two of the findings NJ Advance Media uncovered in an analysis of who would and would not benefit from the proposal, which has sharply divided Democrats who lead the state and sparked tension in Trenton less than three weeks before a new state budget must be in place July 1.
Specifically, the bill (A1) would place a 50% credit on property tax bills for 65-and-older residents who own homes, capped at $10,000, for those eligible, starting in January 2025.
But critics charge that because there is no eligibility cap on income, it would disproportionately benefit affluent seniors who don’t need a break. And they say because it focuses on homeowners, it shortchanges renters, the majority of whom are people of color and have lower incomes.
Using U.S. Census estimates, NJ Advance Media conducted a town-by-town look for winners and losers under the measure, mapping how many seniors own homes in each community, versus how many rent. The review underscored both the bill’s suburb-urban divide, and the racial fault lines that run with that, with many of the state’s cities likely to benefit less than suburban towns with large senior populations and high rates of homeownership.
“If you’re not means-testing it, then the people with the biggest property tax bills are people in big expensive homes, and those also tend to be in wealthy suburban places,” said Tim Evans, the director of research for New Jersey Future, a nonprofit organization that analyzes demographics and development in the state.
In general, Evans noted, “if you’re paying $20,000 a year in property taxes, that means you’ve done well, you live in a nice home.”
The $1.2 billion proposal is being pushed by state Assembly Speaker Craig Coughlin, D-Middlesex, who says too many seniors on fixed incomes are being driven out of their homes by high property taxes. New Jersey is home to the nation’s highest property taxes, with the average bill hitting a record $9,490 in 2022.
The measure is part of a package Coughlin has sponsored that includes two companion bills to benefit seniors by increasing the state’s income eligibility threshold for the Medicare Savings Programs (A2) and revising its income eligibility criteria for the Senior Gold prescription discount program (A3).
“We need to do more for our seniors. We have to do better for those very people who built this great state,” Coughlin said last week before an Assembly committee advanced the measures, which have the backing of the AARP and several local officials.
This comes in an election year when all 120 seats in the state Legislature are on the ballot, and Democrats are trying to keep control of both chambers.
During a television interview on WPIX last week, Coughlin denied that renters would be left out completely. He noted the state’s ANCHOR property-tax relief program provides up to $450 in property tax relief for all renters in the state, and that his new plan would increase that by $50.
Coughlin also argues the entire package he’s proposing would provide broad relief for all seniors.
“All seniors contribute greatly to their communities,” he said. “They contribute greatly to the state. Having them here makes a big deal of difference.”
Still, the larger property tax proposal has sparked vociferous debate, with progressive groups charging it hands money to wealthy homeowners who can afford to pay their bills while leaving behind communities that most need relief.
A recent report from New Jersey Policy Perspective, a left-leaning think tank, found the the wealthiest 20% of homeowners in the state would get 40% of the benefits of the bill, while the bottom 20% would get 5%.
The study also found 1 in 4 residents 65 and older in New Jersey — about 230,000 — rent their homes and would miss out, including more than half of Black and Hispanic seniors. Critics note their monthly rent still indirectly funds property taxes that their landlords must pay.
New Jersey is one of the nation’s most diverse states, with people of color making up 48% of its 9.3 million population. But that diversity is seen less among the state’s oldest residents, with whites accounting for 69.5% of the 65-and-older demographic.
“As you go up the age ladder, you get whiter and whiter,” said James Hughes, a professor and a former dean of Rutgers’ Edward J. Bloustein School of Planning and Public Policy.
Largely made up of the Baby Boomer generation, that population is also more affluent than younger generations, Hughes said. Across the nation, Baby Boomers hold about 50% of the nation’s wealth, and that may be even higher in the state like New Jersey, he said.
Renters, meanwhile, represent 25% of New Jersey’s 65-and-older population, Census data shows. They are spread unequally across the state, and there are 33 cities and towns where more seniors rent their homes than own them, NJ Advance Media’s analysis found. Many of those communities have more people of color and are less affluent than the state as a whole.
Among them are New Jersey’s four largest municipalities — Newark, Jersey City, Paterson, and Elizabeth — where people of color all make up the majority of the population. That is also true in 21 of the 33 municipalities, including Irvington, East Orange, Orange, and Perth Amboy.
That comes as homeownership rates are lower for people of color than for whites, Evans said.
“For sure, the not having a rental component will exclude more non-white households than white households,” he said.
Many of those 33 communities face economic headwinds. Twenty-seven have median household incomes that were less than New Jersey’s $89,296 a year, with some falling far below that figure.
That includes Atlantic City ($29,773) and seven others where median incomes were less than $50,000 a year: Newark, Lindenwold, Paterson, Orange, New Brunswick, Passaic City, and Audubon Park.
Murphy has voiced concerns about the proposal’s fairness. The governor, a retired Wall Street executive who made just under $5 million and paid about $185,000 in property taxes on his Middletown mansion in 2021, noted he would stand to get the maximum cut of $10,000 under the proposal.
So would the state’s most famous resident, 73-year-old rocker Bruce Springsteen, who lives on a sprawling farm in Colts Neck.
“I don’t think we should be in the business of giving the likes of me tax breaks,” Murphy said recently, also voicing worry the plan will be too expensive for the state as tax revenue is dropping.
Only 13 municipalities — including Alpine, home to several celebrities over the years — have an average tax bill that would qualify for the full benefit under the bill, according to the Policy Perspective report.
Alpine was among the winners in NJ Advance Media’s analysis, with seniors owning 51.1% of the borough’s homes. Other high-income communities with large senior populations include Avalon and Stone Harbor in Cape May County and Mantoloking in Ocean County.
The Center on Budget and Policy Priorities, a nonpartisan group in Washington, D.C., released its own analysis of the legislation, calling it “unnecessarily expensive” and “not based on need.”
The bill’s future remains uncertain, though there have been signs of compromise in recent days.
Murphy is negotiating the final state budget with Coughlin and state Senate President Nick Scutari, D-Union, who backs the senior tax cut plan.
Murphy’s office warned last month if the Legislature passes the proposal as is, the governor would veto it and could order a government shutdown.
Murphy told Politico New Jersey on Friday the two sides were “making progress” and “I think the temperature is coming down.”
Coughlin said in his own statement last week he will “thoughtfully consider issues” about the plan. His office declined further comment Monday.