December 16, 2006

The Ticking Property Tax Bomb

Readers suggested a topic on taxes. “Could we have a discussion about the ticking property tax bomb? I rent in Newton, MA. Essentially all of my colleagues have had their property taxes double over the last 10 years, despite city taxes limited by law to 2.5% increases. Even with a few tax-increase overrides, the real increases far outpaced the Prop 2 1/2 restrictions.”

“No-one cared that much when their house values were skyrocketing (it was a kind of brokerage fee). But now with a collapsing market and looming foreclosures, I predict tax wars will soon break out all over the map. (Local towns have become addicted to very agressive spending.) As a potential buyer, even if prices fall dramatically, property taxes and assesments may very well still make it too costly to buy.”

One added, “In California, due to prop 13, there is little worry about taxes. In States ‘Marked to the Market’ property taxes are a nightmare. I know several couples that are selling houses they have owned for 9+ years as a result of property tax increases. Their incomes did not keep up with tax and insurance increases.”

“This is an untalked of consequence of this bubble. And as you point out ‘Local towns have become addicted to very aggressive spending.’ I can visualize everything from complacency to assessors getting shot.”

Another said, “A lot of the condo boom in Center City Philadelphia was encouraged by a recent law granting 10 year tax abatements to new construction. When those ten years are up . . . whammo! I’m assuming the new owners expect to sell out before then? I’m wondering to whom? I doubt the city will reset the abatement.”

“Philadelphia itself redid the method it used to assess property taxes just after we sold and got the heck out of dodge, it had been based on land/age/improvements, and they changed to a ‘comp-based’ model - I heard tax assessments in our old neighborhood (manayunk) went up a LOT (thanks in part to comps like ours, we sold for 3x what we’d paid four years earlier, with no improvements. I still feel a little guilty).”

“So people there were very grumbly about the fact that they were paying a mint (in property taxes) for 60-100 year old rowhomes while the kiddoes buying in the rapidly built new construction condos (with parking!) didn’t have to pay anything.”

“Of course as the Inquirer pointed out, the high valuations on the new condos more than made up for any property tax savings! Naturally.”

“Could get very ugly in Greater Philadelphia - there is a pretty high amount of residential inventory when you count the neighborhoods. And the business tax environment is notably poor.”

“Honestly I hope things aren’t as bad as I anticipate, since I’ve been really happy to see the positive changes the boom has wrought in Philadelphia (most of them at least). So maybe it really is ‘different’ there.”

One from Colorado. “I posted this morning about Larimer County, Colorado voting down a property tax increase for prisons. When home values were going up that was easy. No so much now. Not only will tax increases become more difficult to swing, lower property values mean less revenue to the cities/counties. Will gov have to learn to live with less or will they go the route of Larimer County and try to tack on more ‘user’ fees?”




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129 Comments »

Comment by garcap
2006-12-16 11:48:01

Many new developments in NYC have ten year tax abatement programs whereby the the owner only pays about 10% of the actual taxes under the abatement program for the first ten years. Here’s the catch though: the unabated tax compounds at approx. 15% per year during the abatement period. I’ve seen some 1BR apartments where the taxes jump to $3k per month after the ababtement period expires. The agents aren’t really familiar w/ these details; I had to do the calculations myself so it seems that many people aren’t focusing on this issue at all. Ticking time bomb, indeed.

Comment by dba
2006-12-16 12:01:26

bunch of people who bought brownstones in harlem got $30,000 tax bill surprises after they fixed them up. they complained and got it fixed.

Comment by garcap
2006-12-16 12:53:23

Right, but those were unilateral “surprises”. In the case of abatements we’re talking about a deal that the buyer freely enters into (it’s all in the condo documents). Seems like it will be a lot harder to fix an aspect of the deal that was mutually agreed upon beforehand.

 
Comment by garcap
2006-12-16 13:04:40

That’s true, but I believe that the city tried to slap on those brownstone taxes unilaterally; in the case of the abatements, the tax structure is clearly laid out in the condo documents and has been mutually agreed upon. The abatement seems like a harder issue to fix for the buyer…

 
Comment by Sammy Schadenfreude
2006-12-17 14:43:38

Go figure that local government is penalizing people for having the audacity to rehabilitate blighted neighborhoods. They should get tax credits instead.

 
 
 
Comment by GetStucco
2006-12-16 11:56:08

I recommend Proposition 13 for everyone!

http://en.wikipedia.org/wiki/California_Proposition_13_(1978)

Comment by az_lender
2006-12-16 12:10:39

In this Prop 13 article, as in many other taxation discussions, the debate is always about where to get the tax revenue…never any mention of the bloated public budget that might be reduced. Wikipedia says the losers have been police, libraries, schools, and blames Prop 13 for Calif’s decline from 2nd best school system to 49th best. Hmm, I am not at all persuaded. Wonder if the very best school systems correlate with relatively weak teacher unions. The non-Eng speaking population probably has some effect too.

Comment by B. Durbin
2006-12-16 12:45:45

Well, you could always change the language of the article and precipitate an editing war as people fight to get their version of events recorded.

Wikipedia’s fun that way.

I’m actually shocked at the numbers in the article. 65% voting in favor out of a 70% turnout. That’s insanely high— 45.5% of all California registered voters. I’ve never seen those kind of numbers in any election.

You forgot to mention that Prop. 13 is also blamed for the bad state of the infrastructure… but there never seems to be any mention of the myriad other things that the state revenue has gone toward, with the politicians kicking the transportation can down the road. I think that infrastructure is one of the PRIMARY responsibilities of a state, not busybodiness and microregulation. (That is best left to the cities.)

Comment by mjh
2006-12-16 16:59:36

You hit the nail on the head, “their version of events recorded”. That’s why I never rely on wikipedia as a source of facts. Fun to read up on things, but go elsewhere if you want the truth.

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2006-12-17 22:24:11

Wikipedia is most useful when the aurhor include sources (with links).

 
 
Comment by Jim D
2006-12-17 17:54:47

You forgot to mention that Prop. 13 is also blamed for the bad state of the infrastructure… but there never seems to be any mention of the myriad other things that the state revenue has gone toward, with the politicians kicking the transportation can down the road.

My favorite is “eyeglasses for the poor”. California has some very interesting things in it’s budget.

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Comment by flatffplan
2006-12-16 19:54:59

bingo- counties spend every buck-
at raes double inflation and pop growth

 
Comment by Grantland
2006-12-16 23:12:07

“The non-Eng speaking population probably has some effect too. ”

Oooh how very PC. Mexifornia is lost to the US, get used to it. I’m sick to death of cowards who are too scared of their own shadow to call a spade a spade, while the world crumples to ruin around them.

 
Comment by Martin
2012-11-22 14:24:41

we just got nailed by the la county tax assessor in california after i changed a living trust into another one and we got mortally wounded by a 4X increase in homeowner taxes. I dont think they can do it because of prop 13; But if so, i intend to fight because were both handicapped and i’ll invoke fed statutes about what the feds say and hire lawyer/s. I have a good one. But in the worst case scenario i invoke the quote “”YOU’LL HAVE TO PRY THE DEED FROM MY COLD DEAD HAND!!”". 65 and not in good health, not far to go–Read between the LINES.

 
 
Comment by Mo Money
2006-12-16 12:48:43

Oh yeah, prop 13 is great. I can count on my taxes going up exactly the cap rate every year while my wages stay stagnant.

Comment by Marc Authier
2006-12-16 13:43:09

Stagnant? No in reality your wages go nowhere while real inflation is around 8%. Most of these stupid buyers will end up poor and destitute thanks to inflation created by S.O.B. and criminals like Alan Grenspan and this filthy bunch at the FED.

Comment by Ken Best
2006-12-16 22:56:11

Inflation is rampant, regardless what the gov. tell us.
One baguette at Safeway used to cost me $1, now $1.60.

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Comment by Market Participant
2006-12-17 01:54:41

A nice bottle of Tanqueray, used to be $25, now it is $30. When you factor in the price of olives…

Poverty Sucks.

 
 
 
Comment by JTZ
2006-12-16 22:08:05

?!? Dude, if your wages can’t keep up with the 2% annual cap on tax increases then you have get a better job.

 
 
Comment by sm_landlord
2006-12-16 13:08:19

That Wikipedia piece is heavily slanted toward a particular POV, and attempts to blame everything bad in California on the law. I don’t want to re-open the debate on this, so suffice it to say that the voters passed the law by a wide margin, and all attempts at outright repeal have failed at the ballot box.

The same sort of thing will happen in other states that let their government spending get out of control, then try to dump the problem on property owners.

 
Comment by Patriotic Bear
2006-12-16 15:22:02

Proposition 13 is a terrible law. It transfers the tax bill to younger people. It has helped to support sky high prices. It has allowed city governments to over spend. As long as realestate prices appreciated people ignored the negative side of prop 13. The bill is due.

There is an imbalance of property held by people over 70 years old. As they pass away and leave the property to their kids, the taxes will revalue to sky high levels. The heirs will for the most part be unable to affort the taxes and will sell forcing large amounts of inventory on the market. I think we have a geriatric time bomb in realestate in the prop 13 type states like California and Florida (Save our homes). States without the prop 13 tax schemes have been self correcting to a degree on the way up. They have in general had less appreciation without prop 13.

Social security, medicare, and prop 13 type programs all take from the young and give to the old. The problem is that the young are beginning to understand that it is unlikely they will get anywhere near the benefit themselves unless the population a generation behind them is huge.

With a nation reaching over populated levels the next geration faces rather unfortunate prospects. Part of the responsibility for these dismal choices for the next geration is because grandfather and grandmother wanted to get theres and the hell with those that follow. NO politician has had the guts to tell the AARP to cut it out and play fair with the next geration.

Comment by dreaming 08
2006-12-16 15:36:55

The taxes don’t revalue on transfer from parent to child (I believe this amendment is Prop 78).

 
Comment by MS
2006-12-16 18:41:59

money is printed on a press and the next generation can print it as easily as we did. if this generation develops technologies that enhance the quality of life, the next generation will inherit them without having to develop them so, in some wasy, you can say that the next generation is investing in technology today that will help them tommorrow.

Comment by flatffplan
2006-12-16 19:56:38

except gov spending developes nothing- but debt

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Comment by San Diego RE Bear
2006-12-16 19:46:31

California’s property tax is capped at 1.1%. Do you know how many states have 2%, 2.5%, 3% taxes immediately? If nothing else, Prop 13 does not allow the government to raise taxes on a whim. And with a 9.3% income tax (10.3 if you make over a million) and a 7.75% sales tax the government gets quite enough of my money. I think it is too east to say that elimination of Prop 13 will equalize taxes. My guess it would just mean a 3% rate for all based on current values.

Comment by GH
2006-12-17 05:50:10

How would you like to be sitting in a $700K paying $4000 / MO in mortgages and another $2500 in tax. One good thing that would come of it though would be a rollback of prices to 97 or earlier.

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Comment by Bill
2006-12-17 10:35:51

Hmmm, if YOUR grandma and grandpa lose their home because they can’t pay the taxes will you take them in ? If they get a huge cut in SS benefits will you make up the difference ? If not, I suggest you quit complaining and be happy these programs let them live on thier own as long as possible.

2006-12-17 22:39:27

That is a crock… I know many of thos old folks that are sitting financially VERY well off… And some even are renting out rooms without paying income tax on that rent they are collecting…

No pity for them.

There have been proposals to provide for low income property tax relief.. but that would be a matter of welfare… not a subsidy, not based on financial need.

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2006-12-17 22:36:21

Stephanie Nordlinger, an lawyer in Los Angeles brought petitioned the court regarding Prop 13

In a few articles she was quote to referring to Prop 13 creating a feudal state in California, by allowing for discrimination of taxation on its citizen’s, by allowing people who have bought earlier to have lower taxes, and new owners having to pay higher taxes. Thus, those new owners are subsidizes the costs of the others.

This is thereby a shift of wealth from the young, or unconnected, to the older, more connected residents. And the longer prop 13 is allowed to continue the greate the subsidy becomes for those “feudal lords”.

 
Comment by Martin
2012-11-22 14:43:33

when i was young (who sang it–eric burden?). I ate everybody elses dust; now that i’m secure , Ha Ha! (maybe). its time for the young to eat my dust. young people today are for the most part lazy and unproductive. the way of the world is when the old saved the world 2 times in this century and worked their whole lives to buy a house and send their children to college so they could have a better life ; the children say but daddy, buy me a new car for graduation because i just barely graduwated high school so i can go to the mall and chase down a bed mate. get a education and maybe a good job; or—Just Shoot Yourself in The Head— i forgot you have no money–beg,borrow, or steal it.

 
 
 
Comment by dba
2006-12-16 12:00:23

happened in NJ in the early 1990’s. Jim Florio came in and raised taxes. Caused a firestorm and he was voted out and Republicans ruled until they took over the EPA. Similar thing happened on Long Island outside NYC 6 years ago. Republicans sold the farm to the unions and the democrats came in to the county government and sold another farm.

POliticians don’t care. Unions don’t care. The money goes first to them anyway so they start with the horror stories of shutting everything down unless you raise taxes. People fall for it, agree to the tax increases to educate their children and so it goes.

Comment by John Fleming
2006-12-16 13:09:46

“…happened in NJ in the early 1990’s. Jim Florio came in and raised taxes….”

Think I found the reason why they raised taxes then.
This is what happened in december 1989:

http://query.nytimes.com/gst/fullpage.html?res=950DEEDE1430F932A25751C1A96F948260&sec=&pagewanted=all

Looks like “back to the future”…

 
Comment by MS
2006-12-16 18:44:59

” Unions don’t care.”

technically they do, but to deliver the promised benefits, they indirectly created a new need for slavery and some call it corporate globalization.

 
Comment by RentinginNJ
2006-12-16 20:30:21

NJ has the nation’s highest property taxes. It isn’t uncommon to pay $8k - $10k per year in taxes for a typical house is some areas. Many people have seen 5 consecutive years of 5%-7% tax increases. Some people, who have recently been reassessed, have seen taxes double.

Many retirees are picking up and leaving because they can’t afford their taxes on a fixed income.

While it’s not the only problem, the public service sector unions are sucking us dry. A police officer in Bergen County can make $100k per year for a 35 hour workweek and retire at 55 with a full pension and benefits. The other problem is school funding. They suck money from middle class towns and pour it into corrupt inner city school, where it just seems to disappear.

 
 
Comment by tl
2006-12-16 12:06:47

I agree 100% with my fellow Philadelphian quoted above. He’s DEAD ON about what’s happening here. This city as a whole has certainly changed for the better over the last decade, morphing from a boring, working-class town to a cosmopolitan, energetic city. That said, there is certainly a RE bubble here, as evidenced by his home increasing in value 3x in four years. (Mine took 6 years to do so, but I already lived in a stable part of town.)

For a visual peak of what’s happen here in the truly marginal parts of town, see my photos on the Photo Gallery link above. The photos are numbers 3 to 6, so they’re easy to find.

Note: photo #6’s caption states that the building is going condo. That idea got scrapped this week and now the developer is saying he will turn it into rental apartments. Perhaps.

Comment by az_lender
2006-12-16 12:14:14

Grew up near Philadelphia. At that time it was 2nd biggest US city. A big center of corporate HQ and so forth. But, PA was generally too dependent on old industries like steel (bested by Japan) and coal (environmental anathema). “Weak business tax environment” doesn’t surprise me at all.

Comment by Jay_Huhman
2006-12-16 14:28:38

AZ_Lender,
You must really be old! I believe Chicago was the second largest US city from 1890 to 1970. Philly was third at that time.

My connection to Philly? Father Judge and Temple grad.

 
 
Comment by garcap
2006-12-16 12:57:32

Some of what you say may be true, but Philadelphia is not cosmopolitan.

Comment by tl
2006-12-16 14:48:52

“Philadelphia is not cosmopolitan.”

Well, compared to NY, no. Then again, nothing compares to NY in that case.

Being a transplanted NYer, I see the difference here in Philly. It’s quite remarkable comapared to how it was just a decade ago.

Comment by garcap
2006-12-16 15:34:41

I’ve spent a lot of time in Philly. It strikes me as a city with tremendous potential that has only been modestly realized. The poisonous combination of a corrupt/incompetent government, a huge underclass with a large sense of entitlement and powerful unions stands in the way of the city truly moving forward.

All that being said the city has some wonderful old neighborhoods and great restaurants.

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Comment by dreaming 08
2006-12-16 19:42:43

Just spent 3 years in West Philly while my husband went to law school. Philly is a tough town. Yes, it can be nice if you are in one of the small wealthy enclaves in Center City (or on the Main Line or one of the other suburbs), but the vast majority of the City of Philadelphia is defined by population decline, corruption, crime, and the worst race relations I have seen anywhere. We were mugged at gunpoint, had our car broken into, rented from slumlords, and dealt with plain ol’ mean, angry people every day…we are glad to be out of there alive. One of our new neighbors was sure surprised when someone was shot in the head right on the front steps of the 500K University City rowhome she had just purchased…

 
 
Comment by diceman
2006-12-16 19:00:44

Nothing compares to NY? I hate to break it to you, but NY is a 20th century city. If you want to see the present go to Asia. Singapore or Hong Kong put any US city to shame. Even Europe; Europeans are always amused by our overhead power lines. They make our country look so quaint and ‘developing’.

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Comment by spike66
2006-12-16 19:15:21

Depends how you quantify the “present”. Both Singapore and Hong Kong are under the stranglehold of political dictatorships. Neither has a vibrant media/theatre/music/fashion/publishing world. Neither is culturally adventurous or original. There are other rivals to NY, London comes to mind quickly, but the two you picked…appealing only to the followers of Ayn Rand.

 
Comment by diceman
2006-12-16 22:03:40

Spike,
I was referring to the physical aspect of cities. Politics are always debatable, and there are some people on this board who say America is currently a dictatorship. I won’t quibble over politics, but when it comes to shiny, modern cities, America may not place in the top 5.

 
Comment by Mark
2006-12-16 22:21:23

The political corruption and crime in the US make it a joke among developed nations.

 
Comment by jag
2006-12-17 08:09:19

yeah, its much better in France where “youths” go on month long binges of riots, burning buses, murdering women and injuring cops who aren’t allowed to fight back.
Its much better in France, for sure.

 
 
 
 
 
Comment by boulderbo
2006-12-16 12:16:07

much like realtor’s commissions, mortgage brokerage fees, title company overcharges, etc. property taxes were just a minor inconvenience in owning an asset that was appreciating 20-25% a year. now that the ether has worn off, everyone wants to slash and burn the realtors/mortgage brokers/title companies. property taxes are just the next natural step in the progression. i see a healthy cottage industry in property tax intervention. i still can’t believe that equity market offers no credence to the idea that the housing crash won’t spill over into retail, hospitality, the property tax base, local government employees, trash collection and on and on. the further up it goes, the scarier the consequences, imho.

 
Comment by boulderbo
2006-12-16 12:16:07

much like realtor’s commissions, mortgage brokerage fees, title company overcharges, etc. property taxes were just a minor inconvenience in owning an asset that was appreciating 20-25% a year. now that the ether has worn off, everyone wants to slash and burn the realtors/mortgage brokers/title companies. property taxes are just the next natural step in the progression. i see a healthy cottage industry in property tax intervention. i still can’t believe that equity market offers no credence to the idea that the housing crash won’t spill over into retail, hospitality, the property tax base, local government employees, trash collection and on and on. the further up it goes, the scarier the consequences, imho.

Comment by Suspicious 2
2006-12-16 12:32:34

Very good points. We are all conected one way or another.

 
 
Comment by lainvestorgirl
2006-12-16 12:16:10

Prop. 13 is of limited value if you just paid $1 million for a stucco box in the Valley in 2005…

Comment by az_lender
2006-12-16 12:20:44

In a run-up, Prop 13 is an accelerant. Nobody is going to sell a house where he/she is grandfathered in to a very low property tax basis. So prices run up to the point where all you can get for rental income is 3% of the insane sales price. At that point, the 1% property tax becomes a cogent consideration. When prices stall, comes a ghastly fall.

 
Comment by Icouldbewrong40
2006-12-16 13:06:22

Let’s be clear. Prop 13 does not help any new buyers. We considered a million dollar home, a sh#t box in Brentwood until we learned that we would have to pay 15k a year in prop taxes, and they would go up every year when we were reassesed. Forget it.

Comment by M.B.A.
2006-12-16 17:27:39

I have news for you - 15k a year in many CT towns is associated with homes in the 700krange - imho, that is a deal on 1 mil…

Comment by jbunniii
2006-12-16 22:17:33

Yes but we’re talking about California, not Cape Town. There isn’t much you can buy here for $700k anyway.

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Comment by TG in Norfolk, VA
2006-12-17 09:48:22

I think by “CT” he meant Connecticut, not Cape Town, South Africa.

 
 
 
 
 
Comment by Lou Minatti
2006-12-16 12:16:39

For lots of people in Texas, property taxes are a bigger nut to crack than the mortgage payments. Especially since they’re due in one lump sum. Doesn’t California allow split payments?

It’s a killer this time of year. Suddenly these new working class homeowners realize that their bargain new $100,000 house has a 3% property tax bill due. Then it’s a mad dash to scrounge up 3 grand.

Comment by Ben Jones
2006-12-16 12:44:56

I know of people in Texas who paid off their mortgage, but now pay more in property taxes than they paid to the original lender.

 
Comment by tx_john
2006-12-16 17:42:42

Your observations are correct. This year, my Austin property tax is more than twice as much as my loan payments. I own 80% of my home. Roughly half of the tax at 2.5% is for schools. The small cities surrounding Austin have higher tax rates around 3%.

Funny, the government can play a shell game. Adjust the tax on the house, school and or the land. Raise one and lower the other. Bingo. No change in the tax. But taxes were cut they shriek!

Though, the politicians do claim to have reduced the school portion of the tax. Supposedly, a statewide property tax is unconstitutional in Texas. Since all the taxing units were capped by law, they had a similar tax rate across the state. Thus, a judge declared it a statewide property tax and schools would be shutdown if the tax was not changed.

There is a counter argument about having no state income tax in Texas. But incomes are stagnant.

Equity hawk purchases cause an increase in property values which drives out the fixed income residents. So, the elderly and low income around Austin are being forced out and or they have to foreclose on their property. Much bitterness on the east side of town.

 
Comment by jbunniii
2006-12-16 22:20:04

In all fairness, if raising $3k is a hardship, you don’t really have any business buying a house…

 
 
Comment by mikey
2006-12-16 12:23:00

The new Tax motto of the entire USA will be..”Buy a House and RENT IT from the State”

Comment by Marc Authier
2006-12-16 13:44:49

Nice! Like in Cuba and USSR.

 
Comment by MS
2006-12-16 18:51:16

yeah, that’s why I’m a renter because my Grandmother pays $7000+ in taxes, just to start, and I pay just $550 a month ($6600 annually) and that includes heat, a garage, extra storage, etc…

I could see why cities weren’t too upset to see apartment conversions because, in my case, not only would be monthly payment double (based on what I’ve seen), I’d also have to pay thousands in taxes.

Comment by kpom
2006-12-16 20:05:39

You don’t think you pay property taxes when you rent?

Comment by jbunniii
2006-12-16 22:32:33

Only if the market will bear it. Most landlords who bought in the past few years are certainly paying the property tax (and insurance, and maintenance, and part of the mortgage) without the renter’s help.

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Comment by Troy
2006-12-16 12:23:58

as a Georgist I can certainly say our property tax system is screwed up. Taxing capital improvements (buildings) at the same rate as land is silly and counterproductive. Inflicting massive tax bills on old people, prompting them to Prop-13 like actions, is pretty smart though, since the big landowning corporations would love to ride with “Old Widow Jones” to tax-free collection of land rents.

 
Comment by Janus
2006-12-16 13:03:47

Prop 13 is a nightmare for anyone who hasn’t a biased thinking or direct benefit of Prop13. Okay to keep taxes reduced for senior crowd (at a certain asset level), however, we say then the home market value should freeze in same ratio also.

ÇA pasted together two of its last yearly budget with 15 B in bonds.
Schwarzneg. only got elected because he sold out to spending (including on illegals benefits ) and all the govt.unions ( which politicos have been doing at each level of govt. for twenty five years for salaries and benefits as well as other negligent spending practices). There is no Who wants to pay for their thieving of the public for several decades for their theiving pensions? Same for NY, NJ, etc. etc. …and on each level of govt.

 
Comment by Janus
2006-12-16 13:03:47

Prop 13 is a nightmare for anyone who hasn’t a biased thinking or direct benefit of Prop13. Okay to keep taxes reduced for senior crowd (at a certain asset level), however, we say then the home market value should freeze in same ratio also.

ÇA pasted together two of its last yearly budget with 15 B in bonds.
Schwarzneg. only got elected because he sold out to spending (including on illegals benefits ) and all the govt.unions ( which politicos have been doing at each level of govt. for twenty five years for salaries and benefits as well as other negligent spending practices). There is no Who wants to pay for their thieving of the public for several decades for their theiving pensions? Same for NY, NJ, etc. etc. …and on each level of govt.

 
Comment by JoeSixPercent
2006-12-16 13:04:56

I don’t make a ton of money but I pay $1,800 a month for Fed and state tax. And with what’s left I pay gas tax, sales tax, car registration, city tax, and if I bought a house, tax on that. And since corporations are taxed as well our pay is lower than it would otherwise be.

Why bust my ass? I’m never going to be able to afford the median priced home even though I make more than the median income.

And people continue to vote to raise taxes. I just don’t get it anymore.

Comment by OCDan
2006-12-16 13:36:38

No taxation without representation. And don’t get me started on the services needed. Privatize the whoe kit and kerboodle. IF you need roads, someone will get it done, probably cheaper and faster than the local yocal’s best friend’s company on tax payer money. And hey, if you don’t want a road, that’s okay, people live where the raods are not tarred. Get over it. Where I used to own a home, they retarred the roads, which we in perfect condition, even after almost 10 years. The running joke was that the mayor was paying back some politcal debts.

Comment by JTZ
2006-12-16 22:30:31

Yeah - let the phone and cable companies take over our roads and bridges.

 
 
Comment by pressboardbox
2006-12-16 13:57:38

Taxes, insurance, mortgage, utility bills… Not for me man, I am going to become a bum and live under a bridge. They can’t tax bums, you know. Maybe we could all dip out of the tax base this way and let the govt figure this one out. Didn’t this happen a little while ago in a small town called Rome?

Comment by palmetto
2006-12-16 14:53:20

pressboard, I’m with you on this. And I’m just now reading a book on Rome. Whew! The more things change, the more things stay the same.

Comment by M.B.A.
2006-12-16 17:42:27

Funny you guys bring this up! I have allways thought there could be a built in self-destruct button on democracies. We have not been vigilant enough and the decay has been evident for a few decades now…. we need to LEARN from history, not repeat it (unless we choose to do so)

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Comment by Subare
2006-12-16 17:11:26

In Australia, the property tax is calculated on rental value which I think is a much fairer system. My property would probably rent for around $A1,150/month and my tax for the current year is $A1,007.

Quote from the city council:

-Rates are calculated by multiplying the Gross Rental Value (GRV) by the Rate in the dollar.

-The GRV is an estimate of the rent a property could earn in a year. Where a property is vacant, the GRV is calculated as 5% of the market value of the land.

-The Council sets the rate in the dollar when it adopts the budget.

Time for a revolution, my friends ;)

Note: we can’t claim tax deductions for our primary residence unless it’s also used for a home business.

Comment by ajh
2006-12-16 21:50:03

Not everywhere in Australia.

Where I live the general rates are a percentage of the LAND value.

For a normal OO SFH in a typical suburb the current charge is about $A1300 a year. Maybe half that for an apartment.

For an investment property you pay roughly as much again.

Comment by Subare
2006-12-17 03:15:48

Either way you slice it, still heaps better than off than most people in the US…

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Comment by ajh
2006-12-17 04:15:42

The tax mix is totally different in Oz. Lower property taxes, higher income and sales taxes.

Overall, I suspect total taxes are somewhat higher here than in the US for a person on a given nominal income (and don’t forget your dollar is worth more than ours, so our price for the same item tends to be quite a lot higher).

 
 
 
2006-12-18 00:12:32

I believe that property tax calculation method if very simalar to Henry George’s proposat on property tax being based on it’s value, as in rent . Some owners would then, by economic incentives be pushed to rent their property fully and at market rates, or cough up the cost of their their property not being fully used by the community, by paying the tax themself, for keeping it vacant or not fully renting it in to best meet the needs of the community.

Perhaps some of the more scholarly Georgists can chime in on this subject and correct me or clarify.

 
 
Comment by MS
2006-12-16 18:55:51

Why bust my ass?

Start singing the old Coke commercial with slightly different lyrics: “Just For The Fun Of It.”

 
Comment by Mark
2006-12-16 22:29:22

Most Americans would vote for communism, if it were called something else.
My best hope is for a societal collapse due to the bubble bursting; probably won’t get it tho’.

Comment by KJS
2006-12-17 05:30:24

I’m in Beijing, China right now (just shows how addicted I am to this blog even when I’m vacationing) and given all the faults and flaws of the American system, it still beats communism. Something’s gotta change in the states, though…

Comment by The China Expat
2006-12-17 08:11:12

What do you define as communism? China is probably the most capitalist country in the world at the moment, with no social safety net for anyone but those with the few remaining gov’t jobs, and the second largest wealth gap in the world.

Just looking at the economics of things, the US is a far more socialist country than today’s China. Scary thought, I know…

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Comment by Grantland
2006-12-17 00:12:03

When the revolution comes we must have a universal flat tax of 10% and abolish everything else. Everything.

 
 
Comment by dimedropped
2006-12-16 13:14:39

Government is us. We suffer they suffer. Which means we suffer more. Services will be cut, layoffs or no new hires. Reshuffle of work areas. Road construction stops other than maintenance and all is well cause people will be leaving the area rather then flowing in. Hooray for Florida.

Recently here in Orlando a news crew followed county workers around and found that they were playing cards and drinking beer for most of their shifts. Tighten that belt boys. The party is over.

Oh and wait for the wailing of the teachers. Kids can’t write or read so we need to throw more money at them. In the business world teachers would be fired for failure to perform to minimum standards. No excuses about parents and the like, get er’ done or you’re done.

Comment by az_lender
2006-12-16 13:39:40

Government is not EXACTLY us. Government is those county workers playing cards. “Us” would have the ability to stop that, if we would vote down any and all services other than infrastructure, military, police, and judiciary. Education: don’t know much about vouchers, but competition between pub & priv systems certainly to be preferred to the present mess.

Comment by mjh
2006-12-16 17:49:58

*hears the national anthem in the background*

very well said, I’m with you

 
 
Comment by John Law
2006-12-16 13:41:26

that is such the wrong attitude. most likely it’s not the teachers fault, it’s the students and the parents.

Comment by pressboardbox
2006-12-16 14:02:27

I was married to a teacher and she was naughty alot and used to get spanked.

Comment by oliverks
2006-12-16 17:14:39

It is funny that we believe in socialized schools, where your zip code determines quality. We also believe in communist roads, where to use them, you just need to queue long enough.

Of course we fight ideas like socialized health insurance which actually make a lot of sense as risk is spread to the whole population (although there is moral hazard here). But we scream at the thought for paying for education or road usage.

Frankly, busting up the school system and giving parents control over where their children go to school would do wonders for educational quality.

Charging for road use based on time of access would solve many traffic problems overnight.

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Comment by Mark
2006-12-16 22:34:34

Or just have no gov’t at all and act like adults.

 
 
 
Comment by spike66
2006-12-16 14:19:30

You seem to assume that teachers should make up for lousy parenting. Teachers are hired to teach, not raise children. It’s the families obligation to present children who are ready to learn, and who have been grounded in the basics of hygiene and reasonable behavior. Huge numbers of parents fail this basic standard. Want to clean up the public schools–you could start by fining parents for their child’s disruptive behavior or failure to do their work. Adopt the standards of private schools, and toss out kids of whatever age who are unwilling to learn. Let the parents figure out what to do next.

Comment by Dennis
2006-12-16 17:23:42

Boy do i agree with that!!!!! It is time parents become responsible for their kids. I like the fine part and may be it is a way to get extra revenue the schools need. Hell the way kids behave in school it would not be long until the schools are awash in revenue.

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Comment by M.B.A.
2006-12-16 17:57:21

I’ll see you and raise you a “throw them to DETENTION school” I do not want those disruptive kids running in the streets wild. Oh wait, they already do…

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Comment by MS
2006-12-16 19:00:11

“Teachers are hired to teach, not raise children.”

Based on what I hear from teachers, they tell me: “you don’t have to teach kids who are raised right.” i.e. one teacher went from one school to another and grades went up significantly even though he didn’t change a thing.

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Comment by MS
2006-12-16 19:01:32

Also, there was a recent article about colleges getting more students after they raised their prices because the incoming students thought they were better. This, unfortunately, is a miscalculation we make all the time, including when we look for houses…

 
 
Comment by GH
2006-12-16 23:19:22

Public schools are run by the same types that run our prisons. They are a sewer of corruption and frankly should be shut down. I do agree parents should take responsibility, and those with the resources to so do place their kids in private schools or home school. The blame the parents game would be fine if parents were permitted on school grounds, but they are not. Children spend all day getting test drilled so the school administrators can take home bigger bonuses. Want to really save America, start by rooting out the pervasive evil which is called “public school”

Did you know it is illegal in all parts of the United States to beat a person almost to death? There is two places where it is legal and happens every day. Want to guess where? Prisons and public schools.

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2006-12-18 00:23:49

It seems that public schools have been relegated into the provider of free child care, so bother parents can work two jobs, so they can afford insane housing prices…

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Comment by palmetto
2006-12-16 14:56:34

dimedropped, I am in agreement with you on this. Not a popular stand, but the truth is, people get what they reward.

Comment by John Law
2006-12-16 16:02:36

popular view among people who never have been in front of a classroom.

Comment by palmetto
2006-12-16 16:42:52

John Law, I happen to agree that students and parents are most likely at fault. However, I just don’t see how raising teacher pay remedies the behavior of students and parents, unless it is renamed “combat pay”, which is what it amounts to for the situations that some teachers are in. Perhaps students and parents who behave badly should be monetarily penalized and that penalty applied to teacher pay.

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Comment by MS
2006-12-16 19:07:00

I was a student teacher and I agree with some of what was said. My supervising teacher easily controlled the kids but many kids weren’t learning much. He was shocked when I asked him: “so you think this is good work?” as we discussed the overall quality of a semester project.

I would imagine that a lot of teachers are like him and give huge amounts of extra credit on tests, etc… so that students don’t feel like failures, keep coming to class and believing that they can stay in the game. Unfortuately, as an engineer, I know that these kids will get a huge wakeup call one day. I’m not sure how parents, teachers and students come to grips with this– I think they don’t.

Comment by WAman
2006-12-17 07:57:45

So you went into one classroom in one school and are ready to say that all teachers are like this guy. Get real! I am a teacher who used to be a realtor. Most teachers who get student teachers are older teachers who need to be retired. They don’t understand that the world is different today than 20 years ago.

And most people don’t understand that a huge number of our kids come home from school and play violent video games and that they no longer socialize with other kids their age. Just wait for these kids to grow up and get on the streets.

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Comment by michael
2006-12-16 13:24:58

We have a pretty big fight over our town school budget over property taxes right now. I have to think that the same thing is happening all over the country.

Comment by CarrieAnn
2006-12-16 14:57:05

“We have a pretty big fight over our town school budget over property taxes right now. I have to think that the same thing is happening all over the country.”

Just happened here this week. We had a record setting turnout over astroturf and field lights. The town tried to bundle the purchase with roof repair and asbestos abatement like pork add-ins in some Congressional bill!

Proponents of the project were telling others they could leave town if they couldn’t “vote for the kids.” Kids in the middle and high schools were taken out of class so they could go home and explain to their parents how to vote.

At town meetings, proponents grabbed others from their seats to ask why they were sitting next to the enemy (opponents)….guess friendship wasn’t a good enough excuse. There were stories about pushing and shoving at the meetings.

On a local blog, one woman who called herself a town booster complained that the no voters are fat and lazy (?????) and not volunteering enough. (and that relates to budget decisions how?…perhaps she was trying to infer the no voters didn’t care about the town)

The motions failed 2-1 with record setting # of voter turnout.

Perhaps a biproduct of this bubble burst is we get to watch Russ Winter’s Joe Soccer Mom going off the deep end!

By the way, I’d say it was the retirees that saved the day. With lines that went to outside the building at times, they showed up in force.

 
 
Comment by OCDan
2006-12-16 13:28:25

BEn you have railed nailed it again with this thread. Taxes are gonna crush a lot of people who bought overpriced junk. On top of that a lot of these local gov’ts are screwed because they keep drinkin’ the Kool-Aid thinking this printing press can keep going forever. No saving anything for that rainy day.

Mikey, you are so right. Just look to Northern NJ for some of the most egregious taxation in the world. Sure, you have to pay to keep up services, like the roads, schools, etc., but not at a cost 30K+ per year in some instances. Even in this crazy state of Clownifornia, I can’t imagine ever paying 2500-3000/per month on average to the county tax assessor to live in my house. What these dunderheads don’t realize is that if the situation isn’t rectified, there will come a point when no one will want to “rent” a home from the bank because no one will be able to justify 30-40K a year for prin. and interest and then another 10-15K in taxes, plus HOAs, maintenance. At that only the real playa’s who have money to burn won’t care. Regular Joe SIxpack and us on this board will get out. It will be better to rent at that point. Besides all this housing is is a roof over your head, not like it is the Fountain of Youth or Key to Eternal Life. People gotta learn it is just a place to live. Don’t mortgage (pun intended) your financial future over a roof! And don’t compund it by letting local gov’ts rip you off by making money off “your” home!

 
Comment by Troy
2006-12-16 13:29:37

And since corporations are taxed as well our pay is lower than it would otherwise be.

Not necessarily. Generally speaking, Management will give you the money you ask for, and not a penny more.

 
Comment by dimedropped
2006-12-16 13:38:44

At the rate of foreclosures in Florida we will have 500,000 next year, in some form of the process.(mostly condos but with a bunch of houses too) That means 500,000 homes not paying taxes.

Oh and don’t forget all those $11,000 per lot impact fees from builders. Toast!

It is in limbo through the foreclosure process. This totals about $7100 per year per house at the present millage rate. I think that comes to a 35 billion dollar deferment of taxes does it not?

Assuming the lenders have to bring all that current upon foreclosure do you think they will be cutting it loose as soon as they get it?
I predict $500,000 houses in 2005 will be sold for less than $250,000 in 2008. I also predict that the state of Florida will be faced with insolvency as well as many counties and municipalities and the citizens will say no to 1) an income tax 2) a repeal of save our homes tax cap which is a maximum increase of 3% per year.

Further, the property values will be reassessed at the current market levels and we will see the tax base eroded further. The counties are already floating trial balloons about increased millage rates to see what happens. I am pretty sure I know what will happen.

As the builders dry up and blow away a lot of incidental revenue goes with them.

Impact fees of $11,000 per lot…do the math on that number which is for nothing as you still have to pay for each item in the fixed expense area as a homeowner.
Service Fees
Road fees
Taxes on Services
Permits Fees
Inspection fees
Taxes on land slated for development that have cows on them now.

Oh and all those folks that rezoned their agricultural holdings in concert with the National builders are hosed. The comprehensive land use plan was changed to accomodate the development of the land and it is in stone. Try an assessment of $50,000 per acre as opposed to $2000 an acre for cows on 5000 acre tracts all over the state. That is why St. Joe paper company shut down as a developer. They had to convert back to an agricultural entity or become insolvent. They are not alone.

 
Comment by joe
2006-12-16 13:54:43

Just south of philly is wilmington Delawhere, supposedly a low property tax mecca. Basically its just a big fat lie. The city is 3/4 bombed out, crime infested ghetto. If the people that live in the ghettoed parts even pay property taxes is not much. The remaining 1/4 is an exclusive uber rich area where people bought long ago & never moved. Not alot of turnover and they only reassess on sale, so many homes have increased dramatically in value but the taxes are the same as 20 years ago. Then there is the new plan I bought into, the exclusive “riverfront”. They reassessed my taxes twice in one year jumping by 35% while simultaneously the market price for the unit slide from 410k down to 350k!! Buyers complained about how high the taxes were and added that to the list of reasons not to buy it (drug, crime, homeless, panhandling being the other reasons). The same home in NoVa goes for about 500k & the taxes are about 10-20% less and its much safer. Plus I actually get government services for my taxes in NoVa, e.g. quality schools, responsive police etc. The wilmington police never responded to my concerns about noise and drug deals occuring just blocks from my home. The wilmington public schools are soo unsafe & of poor quality that everyone sends their kids to private school. So it only made sense to dump my luxury ghetto riverfront townhome and move back to a first world country where my taxes were lower & I actually got something of value for them in return.

 
Comment by Bob_in_ma
2006-12-16 14:15:28

The original poster in Massachusetts seems misinformed. Each town can only increase revenue from existing real estate by 2.5%/year total. So the average person will see a 2.5% increase. In fact, some people might see a 10% increase (because their part of town suddenly became more popular and prices went up disproportionately, but then others will see a drop. Appraisals here are fairly accurate and seem pretty fair. Over the last four years, since prices went up so much, our rate has gone from $16+/1000 to $12+.

If a majority of a town’s voters vote to, they can allow a greater increase. In the Western part of the state where I live, at least 75% of these overrides get voted down. My little city last voted for an override in the 90s.

Frankly, this is the best possible system I think anyone could come up with. The one in Florida is completely idiotic. Each year, the rate for a new homeowner becomes even greater than that for people who’ve been in the same home since 2000. Five people living in identical houses could be paying five different rates. Selling a house could mean a $2,000/year increase in taxes. That makes your house worth less, and coupled with the big increase in insurance rates, it’s a big reason that real estate in Florida tanked first, and is likely to recover later, than the rest of the country.

Comment by indigo144
2006-12-16 19:07:59

As the original poster, let me emphasize that the sprit of Prop 2 1/2 and reality seem to have diverged.

As I said, nearly 10 of my colleagues who had owned their properies for about 10+ years have had their taxes double in that period. This is not an unfortunate pocket but it seems systematic.

I think the loophole lies in that the 2.5% limit is restricted to the old tax base — new construction and probably `extensive’ renovations are exempted. So every year the cities can tax some properties without restriction. That becomes part of next year’s base and so part of the unrestricted increases get fed into the old pool every year. I am not a lawyer or an accountant but it seems clear that the tax revenues have been growing at much faster than 2.5%.

Its just that nobody cared.

Comment by Bob_in_ma
2006-12-18 07:19:07

“So every year the cities can tax some properties without restriction.”

No, that’s absurd. They are taxed based on appraisals. Of course, new construction isn’t included in the cap the first year it enters the rolls, but the price is set by the sale price, or cost of lot/construction. That isn’t going to cause anyone’s rate to double.

Same with extensive renovations, which we had to do. Our appraisal increased by the amount of the improvements plus some for appreciation, but as I mentioned the rate went down.

If you’re friends taxes went up that much, it’s because the towns they live in voted some hefty over-rides, which is their choice.

But most likely, your friends exaggerated and you, not having any first hand experience, took their word for it. TThe last time an over-ride came to a vote here, the “no” campaigners all insisted their rates had jumped 25-30%. In this little town, everything is published and it was clear these people simply lied to try to make their point.

If it is clear a town is not following the rules, you should post some data.

 
 
 
Comment by Wacahootaman
2006-12-16 14:46:54

Most countys in Florida have at least a 2 percent property tax rate. That used not to bite so bad when assesments were low. But the state now requires that counties asses at 100 percent of market value and the values have soared so the taxes are now pegged at those bubble peak prices.

I gotta sell my family home now because I cant pay the taxes. I just inherited it so now the taxes will quadruple and I cant afford to keep it.

It is the home where I grew up and where both my father and mother died and I would love to keep it but cant due to Florida’s abusive property tax extortion racket.

“The power to tax is the power to destroy” John Marshall, the first Chief Justice of the US Supreme Court.

TAX REVOLT! TAX REVOLT!

Oust the Florida Tax Mafia in 2008!

 
Comment by Chip
2006-12-16 14:51:42

Hopefully Citizens’ groups will form with the specific purpose of proposing exactly where the taxing government entities should cut services. No cooperation? Recall election.

Comment by palmetto
2006-12-16 15:01:02

I’m with you guys.

 
Comment by mjh
2006-12-16 18:00:45

I’d love to see a complete audit of the government done. Nothing is safe or off limits, no preset quotas to meet (never a good idea), but bottom line, find everything we can live without and cut it. Cut deeply, cut quickly. No lobbyists, political correctness, etc. allowed during the process, too.

Think that’s too much? I’ll add one more: a full report presented to the public of where we were, what was done, and where we are now.

Comment by MS
2006-12-16 19:08:37

it wouldn’t be finished in our lifetime!

 
Comment by MDMORTGAGEGUY
2006-12-16 21:53:51

……..and legalize pot and tax it, refer madness was soooo last century.

2006-12-18 00:42:03

I think you are on to something with the “legalize pot and tax it”.

I think right there, through direct and indirect costs to the public by outlawing it, can be saved. Also, the direct revenue that can be generated from the taxing of it, which was not being taxed before, would add revenue. Thus, there would be a net savings and perhaps gain in revenues to the state, to operate government.

Also, more people will be happier and at peace… happier society. See: “Sex, Drugs, and Democracy”, a documentary about the Netherlands.

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Comment by FLDude64
2006-12-16 17:00:54

Well, the tax insanity here in Palm Beach County, Florida continues: Gary Nikolitis, the county property appraiser, is campaigning (on the county government-owned web site) for Save Our Homes portability whereby homeowners will get to transfer their incumbent exemption to a new property, up to $400,000 of assessed value, while continuing to stick it to second home / out of state owners, first time buyers, and businesses. On the state level governer-elect Charlie Crist wants to double the Homestead Exemption to $50,000. These actions, if implemented will probably generate some real estate sales activity in the short term but ultimately will amplify the current market distortions and gross tax inequities. (Example: I pay more property tax on my small condo than many pay on million dollar waterfront / ocean access homes.) Read about it here:

http://www.pbcgov.com/papa/ASPX/News/showNews.aspx?seq=181

 
Comment by Dennis
2006-12-16 17:34:27

America is beginning to wake up andit is not a pretty sight! Taxes are killing us all and our future children will all have to make $200,000 a year just to rent a home let alone purchase one.
TAX REVOLT is on the ner term horrizion in all states as we are all getting SCREWED by the leaders we have intrusted to to the right thing. If the Public sector had to rely on the same health,retirement benifits and working benifits there would be a BIG revolt. Well…..It will happen sooner than later if Americans wake up and vote these SOB’s out of office.

Comment by MS
2006-12-16 19:10:14

it’s called the “inflationary economy.”

 
 
Comment by fionaFL
2006-12-16 18:45:43

in Fl a lot of the concern is windstorm (read:hurricane) insurance. Next up is property taxes. My city is spending like a drunken sailor, hiring new employees, who in Fl enjoy better pension and health benefits than 90% of the taxpaying citizens. Businesses are getting hit from all directions, as are landlords - neither is protected by Save Our Homes. This accounts for condo conversions, since landlords of moderate priced housing could not raise rents enough to cover the tax increases. In our city budget meeting, I was one of 3 people who attended. SOH protected homes pay on 3% raise in value, the increase spread over 12 months. Most people I have spoken to did not realize what the TRIM notice was and threw it away (Truth in Milleage). According to FL law, if the taxing entity does not lower milleage to the rollback rate, it has raised taxes. With current taxable value increases in my city over the last 4 years averaging 19%, the city council has decreased millage by laughable amounts and taken in millions more each year. And did I mention that I pay real estate taxes to 8, count ‘em, 8 different entities? County, School Board (both have bond issues too), South Fl Water Management, local Drainage Board, local Hospital district (indigents, what happened to Medicaid?), Children’s Council, City, and Inland Waterways (I live 20 miles from the ocean). Like many others, if not for SOH, I would have to sell out when we retire, because the taxes after the mortgage was paid off would be more than we could pay.

 
Comment by spike66
2006-12-16 19:07:49

“If the Public sector had to rely on the same health,retirement benifits and working benifits there would be a BIG revolt.”
There is a total disconnect here between those in the private sector and the gov’t. employees at whatever level. Public sector employees enjoy job security and in exchange should receive fewer benefits than those in the private sector who shoulder all the economic risk. For the record, gov’t employees are the one sector who should not be allowed to form unions…it’s an outrage that those who live on taxpayer dollars can hold the same taxpayers financially hostage for ever more benefits.

Comment by flatffplan
2006-12-16 20:00:07

gov unions scare me more than terroists- heck I can shoot them

 
 
Comment by diceman
2006-12-16 19:08:37

Considering our antiquated, crumbling infrastructure property owners should brace themselves to pay much, much more going forward. Infrastructure that isn’t sold to private companies (largely foreign) is is terrible need of repair. Oh, and the private owners of our bridges, water systems, and roads will be raising the fees to use them, a lot.

Comment by GH
2006-12-17 05:45:35

There is not enough money in the universe to pay for 1/4 of what needs to be done to fix our infrastructure. I increasingly see hyperinflation as being the future of the USA. And yes… it will not be pretty for a while.

Today, things are so bad that the majority of our taxes go to entitlement programs of one nature or another.

If I go over 40 hours I hit 56% in State / Federal and local income tax, and on top of that we have sales tax, property tax and sky high utilities and energy costs… I’m telling you, there is not enough money in the universe for all this and taxing people into the dirt is no answer.

 
 
Comment by tj & the bear
2006-12-16 19:40:06

The revolt may occur quicker than any of us can imagine.

Government entities at all levels are either deep in the red or peering into the abyss, mostly due to retiree benefits and overly rosy assumptions of future investment returns. What happens when revenues plunge and the markets tank?

First go the developer fees as construction slows. Second, property taxes fall as prices drop. Third, retail sales taxes suffer as people cut back on spending. Fourth, capital gains evaporate as Wall Street suddenly snaps back to reality. Fifth, income/payroll taxes dive as construction and financial services industries cut aggressively while retailers trim nervously. Finally, corporate taxes and fees disappear along with profitability.

Things will get real ugly by 2008.

 
Comment by Mike Fink
2006-12-16 22:14:27

Well, I just have to chime in on this one.

SOH is the BEST thing that has ever happened (if your a govt entity looking to do some unrestricted/insane spending). Why? Because the majority of your constituients (read, people who can vote for/against you) are protected by SOH. They don’t give a flying crap what you do with the money, or how much tax your charging; they are all dialed in at their 3% from now until they die. The British tried this game too, we called it “Taxation w/o representation”. The SOH people just call it “a great deal”.

The other thing is, on the face of things, SOH seems like a good idea. And it, imho, really is a good idea (controlling govt spending is always a good thing in my eyes). The problem, however, is the wording/implementation of the law. Here’s the current law:

Your home value, for tax purposes, may not increase by more then 3% each year that you own in.

Here is what it SHOULD say:

Your govt may not increase budget by more then 3% per year, from here on out.

That’s the fair thing to do, and it solves all these stupid problems we have down here now (like the fact that everyone is locked into their homes because the tax burden is triple if they move across the street). SO simple, and it achieves the DESIRED goal; controlling spending. All SOH does is control YOUR spending, not govt spending. Trust me, as we are all going to find out, govt spending is a BIG problem down here. A problem that most people don’t give a crap about because they don’t have to pay for the increases. Having the streets paved in gold and a cop on every corner sounds like a great idea….when your neighbor is the one footing the bill.

http://www.wpb.org/citycenter/

Don’t you think that would look better with a Svorski (sp) crystal dome on the top? How about some more gold accents??

 
Comment by JHFarr
2006-12-17 08:57:08

I’ve posted this before, but in the case of my sister and brother-in-law in Austin, TX, this year the monthly installments on their property tax will EQUAL their mortgage payments. (They bought in ‘88, original price c. $86K.) As their incomes have not grown and are showing no signs of doing so, the outlook seems bleak for them. They’ll probably have to sell the house in a few years and head for God knows where.

 
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