BOE 2005 Needs and Resources

Needs and Resources
5/16/05

Using their inquiries as a guide we suspect that the Financial Oversight Committee (FOE) will recommend that the Board Of Education (BOE) cut the tax increase by $1.8M of the $116M budget or %1.55. The BOE seems geared to argue that any cut at all will be detrimental to the education of our children. But for the BOE to make that increase the taxpayers will have to decrease their budgets. Some could argue that that tax increase is detrimental to their lives.

To date we know of no one that has calculated the burden on the taxpayer. So how does this balance.

The calculation we made is approximate so we will include our assumptions and references. The property tax increase for the average home is $545. That is 1.23% average median income after taxes.

We at TUF have always recommended that the council adjust the budget by what ever the FOC recommends. If the BOE wishes to reduce our budgets by 1.23% isn't it fair to reduce theirs by a similar amount?

Assumptions and References

The average home tax increase $545 - we have covered that before. It is NOT the $286 that the BOE advertised.

Average family income 1998 - 53,300
Average Inflation in NY and Philadelphia from 98-2004 - 18%
Comes to $62,900

    Federal Taxes
Standard Tax Deduction - 9300
Tax Rate - $1,460 + 15% of adjusted income over $14,600
Comes to $7307

    Social Security
Rate 6.2% of taxable income
Comes to $3900

    NJ Taxes
For adjusted income of $53,000 - $1000
(We had to make many assumptions so we guestimated between $800 and $1400.)

    Franklin Property Tax
Tax Rate 2.06/$100 of house value
Average value of a home 310,717 - BOE material
$6400

Total Income after these taxes $44,300. There are two problem with our analysis. The average income takes into account the all families including those who rent. While renters pay property tax in the form of higher rent that issue is not used to figure out the price of the average home. In other words a family with an average income does not live in the average home. On the other side of the argument are people that have retired and whose income drops significantly but their property taxes remain the same. Again in other words a family with an average income does not live in the average home. Thus we will leave the numbers as they are. There are many confounders to this calculation but even changing the income by a few $1000 makes little difference.