Tax Gap In Essex County: Many Wealthier Towns Pay Lower Rates

ESSEX COUNTY, NJ — If you ask Michael Sheldon to break down Essex County’s notoriously high property taxes, there’s an analogy that the former Belleville Board of Education member likes to use: the price of milk.

It goes like this.

Let’s say that a gallon of milk costs $4. For families in Belleville, where the median household income is just over $70,000 a year, that gallon of milk will take a bigger bite out of their budget than in nearby Millburn, where the median income is more than $225,000.

Now, imagine that gallon of milk is actually priced lower in Millburn stores… and sometimes a lot less. Sound unfair to Belleville residents? The same thing is happening when it comes to property tax rates across Essex County, Sheldon says.

According to recent figures released by the New Jersey Department of Community Affairs, the state continues to have one of the highest average property taxes in the nation. The average property tax was $9,284 for a home valued at $335,623 in 2021. Those numbers were up 1.9 percent from 2020, when they stood at $9,112 for a home valued at $330,578.

It’s easy to make comparisons between towns based on their average tax bills. In Millburn, for example, the average property tax comes to $24,485 on a $1,264,010 home, which seemingly ranks it way above Belleville, where the average property tax comes to $10,513 on a $277,094 home.

• Read More: See How Every NJ Town Ranks For Property Taxes On New List

But if you take a look at a town’s “effective tax rate” – the amount of property tax paid relative to a home’s value – a much different story emerges, Sheldon told Patch.

Analyzing the data in a recent Patch article on Essex County, one of the highest-taxed in the nation, Sheldon came up with a startling hypothesis: the wealthiest communities almost always had the lowest effective tax rates.

What is behind the apparent gap? That answer can fill a book, Sheldon said.

“As far as explaining why Millburn, Fairfield and Essex Fells have effective tax rates about half that of Belleville, Irvington, East Orange and Nutley, this would probably be the basis for several doctoral dissertations on the socioeconomic implications of living in very affluent vs. hard-scrabble communities,” he opined.

Sheldon isn’t the only Essex County resident who has been taking a hard look at the fairness of property taxes lately.

According to Adam Kraemer, who plans to run as a Republican for county executive in the next election cycle, local property taxes are “regressive, inequitable, excessive and confiscatory.”

“The average bill [in Essex County] is $12,323 for property tax, the median household income is about $65,000, and the average house value is about $400,000,” Kraemer told Patch. “So a normal family would devote about one out of every six dollars they make in property tax to live in an average home.”

While the residents in wealthy towns like Milburn and Livingston pay more in average total dollars than their neighbors in Irvington and East Orange, those in the latter pay a higher percentage of their property value, he said.

“If you’re living in a $200,000 house in East Orange, you would pay about $10,940 in taxes,” Kraemer continued. “That’s almost certainly more than the mortgage.”

Those numbers also mean it will be hard for property values to go up in some municipalities, and that’s one of the main ways people with lower incomes can build up their personal fortunes, he stated.

“So wealth-building is not happening as it should for the good folks of East Orange,” Kraemer said.

Think that just because you rent your home, you don’t have to care? Think again, Kraemer said.

“About 20 to 30 percent of the rent bill is a hidden tax,” he claimed. “Landlords need to devote about 20 to 30 percent of what they collect in rent to property tax, so they just do this by passing on the tax to tenants in higher rent.”

“These taxes harm us all in Essex County,” Kraemer added.

• See related article: NJ Has One Of America's Worst Racial Wealth Gaps, Study Says

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