The Star-Ledger Tax Trauma
Index
ABOUT THIS REPORT: The Star-Ledger Tax Trauma Index is based on a
statistical analysis of tax, income and real estate data. While
the index is purely subjective, it is an attempt to show the
impact of property taxes on communities beyond the mere
reporting of raw statistics.
The average tax bill for homes in each town was calculated by applying the 2005 tax rate to the average residential tax assessment. These figures are published annually by the New Jersey Department of Community Affairs.
The market value of the average home is based on the "true value" of the average assessment, a ratio obtained from the Division of Taxation and based on a state analysis of the assessed-to-market ratio for property in every town. For instance, if the average assessment of a town is $100,000, and the average ratio of sales price to assessed value in a town is 4 to 1, the market value of the $100,000 assessment would be $400,000.
Income data was based on data obtained from Claritas, a leading market research company. Claritas reports the average household income for each community. Because homeowners generally earn more than non-homeowners, this figure was then adjusted using 2000 Census data which documented the income gap between owner-occupied households and renter-occupied households in each community.
These three figures were used in the three categories that make up the trauma index: The amount of the average tax bill, taxes in relation to the market value of a home, and taxes as a percentage of income.
For each category, the towns were ranked, and the rankings were converted to a percentile figure - 0 to 100. The three percentile rankings were then combined in a weighted average. The average tax bill makes up 20 percent of the score; the other two measures represent 40 percent each.
Scores for towns with fewer than 500 homes were calculated separately since the data was based on a small number of homeowners.