In Fiscal Year (FY) 2013, New Jersey collected $56.3 billion in state and local taxes. While this is an impressive sum of money, it tells us little about whether or not the average New Jersey taxpayer can afford this level of taxation.
As shown in Chart 1, New Jersey’s state and local tax burden (tax collections divided by personal income) was the seventh highest in the nation for FY 2013 at 11.5 percent—this is 11 percent above the national average of 10.3 percent. As shown in Chart 2, the tax burden has grown significantly over time by 75 percent to 11.5 percent in FY 2013 from 6.6 percent in FY 1950.
New Jersey’s high tax burden is driven by the highest-in-the-nation property tax burden at 5.5 percent which is 68 percent above the national average (3.2 percent). New Jersey also has a higher-than-average individual income tax burden (2.4 percent, 25th highest) and corporate income tax burden (0.5 percent, 11th highest).
Of course, the tax burdens for local government can vary just as much as they do among the 50 states. As such, we have also calculated the local government tax burden for every county in New Jersey—this includes every taxing jurisdiction within the geographic county borders whether it is a city, a special district, or county government itself.
The New Jersey counties with the highest local government tax burden include: Cape May County, NJ (9 percent), Atlantic County, NJ (9 percent), and Sussex County, NJ (6.5 percent). The New Jersey counties with the lowest local government tax burden include: Hudson County, NJ (3.9 percent), Cumberland County, NJ (4.3 percent), and Somerset County, NJ (4.8 percent).
J. Scott Moody has nearly 20 years experience as a public policy economist with a specialty in tax policy and has over 180 publications. He has worked for numerous national and state-based think tanks such as the American Conservative Union Foundation, Federalism In Action, Tax Foundation, Heritage Foundation, and The Maine Heritage Policy Center.