New Jersey homeowners already know the headlines. The state has ranked first in the nation for property taxes for years running, with the statewide average effective rate sitting at 2.23% and the average annual bill crossing $10,000 for the first time in 2025. Most buyers see that number and absorb it as a fixed cost of entry. What rarely gets calculated, though, is what that tax burden actually adds up to over the full span of a mortgage.
The focus during the homebuying process almost always falls on the interest rate. That makes sense. A percentage point or two on a 30-year loan is worth tens of thousands of dollars over time, and prospective buyers spend considerable energy shopping for the best terms. But in New Jersey specifically, the tax side of the monthly payment deserves the same level of scrutiny, and most buyers never run the full numbers before closing.
Paramus NJ, the newly elected Republican majority is pleased to announce a new budget for the Borough of Paramus. The budget will cut the former Democrat majority’s spending increase by more than half and cut the average tax increase per home nearly 7.5% without cutting municipal services.
Average Worker Pays over $16,000 in Income and Payroll Taxes
Washington, DC (June 19, 2014)—U.S. wage earners face a 31.3 percent tax burden on pre-tax income according to the latest analysis from the nonpartisan Tax Foundation. Although this burden is high, the average across the 34 OECD countries is slightly higher, at 35.8 percent.
Using the latest data from the OECD, the report hones in on U.S. tax policy and explains the breakdown of the average U.S. worker’s tax burden, how it compares to other developed countries, and why workers, instead of employers, bear the weight of the tax burden.
An average wage earner’s tax burden is comprised of income and payroll taxes. Although a little more than half of a worker’s payroll tax burden is paid by his, he ultimately pays this tax through lower take-home pay.
While the revenues from these taxes pay for government programs, it is important to know what the cost of these programs are from the average worker’s perspective.
Key findings include:
The total tax burden faced by wage earners in the United States is 31.3 percent of their pre-tax earnings, paying $16,658 in taxes in 2013, with $8,196 in individual income taxes and $8,462 in payroll taxes. In the absence of income and payroll taxes and the benefits they provide, the average worker would take home nearly $5,000 in additional annual income for a total of $53,223. The total tax burden faced by average U.S. workers is the 26th highest in the OECD and below the 34-country average of 35.8 percent. The average U.S. worker faces an above average income tax burden (15.4 percent vs. the OECD average of 13.3 percent) and a below average payroll tax burden (15.9 percent vs. the OECD average of 22.6 percent). Many OECD countries have high payroll taxes, such as France, which places a payroll tax burden of 38.5 percent on average workers. In some countries, over 50 percent of a workers total tax burden is paid by their employer. Many countries in the OECD, including the United States, have special provisions for families with children that lower their overall tax burdens.
“Although the United States and most OECD countries are known for having progressive tax systems that tax high-income earners more than low- or moderate-income earners, a large portion of the tax burden still falls on the average worker,” said Tax Foundation Economist Kyle Pomerleau.
“Even here in the United States, which has lower tax burdens than most other OECD countries, average workers end up paying nearly one-third of their income in taxes. It is true that governments in the OECD, especially European countries, provide more government programs. However, their workers end up paying a much higher price for them.”
