© WSJ 2010

Taxpayers around the country these days are getting socked with new state fees and taxes on everything from electricity bills to traffic fines. But there's good news in New Jersey, of all places, where newly elected Governor Chris Christie is making a big push to impose a constitutional 2.5% cap on the increase in annual property taxes.  

That's right, New Jersey.  

The Garden State is the national champion in property tax bills, with an average cost to homeowners of $7,281 a year, far above the $5,617 national average. Including a nearly 9% top income tax rate and a 7% sales tax, New Jersey taxes take 11.8% of state income, also the highest share in the U.S., according to the Tax Foundation. Fifty years ago, New Jersey's property taxes were about average and it had neither an income nor sales tax, while state services and schools were arguably better than they are today. 

Mr. Christie's effort is modeled after Proposition 2½ that voters in Massachusetts endorsed in 1980 and which capped real estate levies at an increase of 2.5% per year. Massachusetts went from having the third highest property taxes in the country to the 31st in 2005. Homeowners pay less over time, while the lower tax burden tends to be capitalized into higher housing values. This is a smart way to reverse the fall in home prices that has reduced the net worth of many New Jersey families. Massachusetts saw big gains in home values in the 1980s after Proposition 2½ became law, as did California after its voters passed similar limits via Proposition 13 in 1978.  

Mr. Christie's reform requires legislative approval, followed by a state referendum as early as November. Democratic leaders dislike the idea, preferring to reinstate an income-tax surcharge on millionaires that would only make the state less desirable for business. Mr. Christie has rightly said no to that, which already sets him apart from the state's two recent Democratic governors who raised taxes again and again in the last decade and still left the state with a fiscal mess. 

The property tax cap would certainly reduce the growth in state revenues, which in turn would force localities and school systems to economize the way everyone in private business has had to do. Mr. Christie calls it "doing more with less." That would be a big change in New Jersey where for half a century politicians have done less with more. New Jersey's property tax fight is one to watch.