Thursday April 19, 2007

What's up with property taxes?

house

Thank you to Jim DeFede for saying what I’m been thinking: property taxes are a good thing. First of all, exchanging property taxes for a increase in sales tax is a horrible shift of the tax burden from the rich to the poor. “Under Rubio’s plan, you might save a couple of thousand dollars, but Rush Limbaugh for instance, will save almost a half million in taxes every year on his Palm Beach home.” That’s a half a million that either gets cut from city budgets (and “disproportionately” is the key word there), or gets paid by people buying diapers.

You know how you did your taxes on Tuesday evening (oh wait, that was me)? Well, remember when you got done with the federal income taxes and you went on to do your state income tax? No: you don’t. That’s because Florida is one of the seven (count ‘em) states without an income tax. “Thank you, Walt Disney World,” my old boss used to say. Thank you Limbaugh, too. Thanks to the homeowners. And don’t worry — us renters have seen our rates go up plenty over the last few years, so it’s not like we’re not paying our share.

You’re squeezed between rising insurance rates and increasing property taxes? Oh, I’m sorry (the latter is because the value of your property has skyrocketed over the last five years, by the way). It turns out that you live in a tropical paradise, to which 400,000 new people move every year. Oh, and we have hurricanes that come and wipe out a neighborhood or two every couple of years. That makes it expensive. You can’t stand the heat? Well, you should have sold your house at the beginning of last year like Critical Miami told you to do, and you’d be sitting on a big pile of cash right now waiting to buy again when prices bottom out (or maybe moving to a nice quiet little town in Colorado).

Or you can trade down from the huge house you can’t afford to a smaller one you can. Then the overall housing prices won’t effect you as much. Look: governments do things. They mostly do things that everyone benefits from, but which individuals would not independently want to spend money on (like educating our kids, for which Florida spends less per child then any other state). We can talk about re-calibrating the rates, but until everyone suddenly decides they want to live in a truly limited-government, libertarian society, I don’t want to hear any more whining. Get out there and mow your lawn.

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  1. Chris    Thu Apr 19, 10:00 AM #  

    Yes the value of property has skyrocketed over the last few years but unless the property is an investment and not a primary residence I do not see the benefit. Any profit you made selling it will just go towards a new place that has also skyrocketed. Basically evening it out. (Mortgage roughly stays).

    Meanwhile, taxes go up. I think eliminating them would be foolish. But not cutting them is hurting the middle class as well (yeah we’re out here!!).

    $400-$500/month in taxes for a one bedroom condo in a low-rise building takes quite a toll on a monthly budget. We’re not talking Miami Beach or Coconut Grove here.

    I have to assume that there has to be a surplus since the bubble began and now. There has to be some room for a cuts.

    Of course taxes are needed. Just how much is what we are all waiting for. When I pay my monthly bills, the last thing I think about is Limbaugh’s tax bill. The rich will get richer, but I really don’t care. Gotta keep truckin.



  2. Henry Gomez    Thu Apr 19, 11:12 AM #  

    Sorry but there’s something inherently wrong with paying taxes year after year on property you already own and not having any control of your tax bill.

    Fees for services are different but these property taxes have become a boondoggle.

    The idea that the rich get richer at the expense of the poor is a canard. Wealth is created not stolen.

    If I lose my job my consumption will go down and so will my sales tax contribution. Under the current system, that tax bill is coming in november no matter what and it will never be less than last year.

    Plus the idea that the newest guy on the block (even though he has the smallest house on it, like me when I moved into my current place 3 years ago) is paying the highest taxes is ridiculous. It smacks of a pyramid scheme where the objective is to not be the last one in.

    Real Estate and related businesses is the 2nd largest industry in the state and it’s coming to grinding halt because of the upward intertia of property taxes.

    Where’s the benefit?

    No, a sales tax makes the most sense since it’s linked to consumption. The wealthy will pay more because they consume more. Their savings will be transformed into additional consumption and investment (both of which are good for the economy and by extension, the poor).

    Your argument is for a direct transfer of wealth which history has shown again and again does not solve the problems of poverty.



  3. Henry Gomez    Thu Apr 19, 11:19 AM #  

    By the way many people are stuck in larger homes than they need because mvoing to a smaller home that will be re-assessed in today’s will result in a higher tax burden. The result is an incredibly inefficient distribution of properties. You have young families wanting bigger homes but not able to afford them and you have retired couples with the homes those families would buy because the tax implications of downsizing are counterintuitively negative.

    The system needs a bold innovative reform and Rubio’s plan is just that. It will allow the real estate market to operate like other markets do…freely



  4. nonee moose    Thu Apr 19, 11:48 AM #  

    I’m not a big Limbaugh fan, but your implication that he somehow doesn’t merit a proportional tax savings because he’s wealthy smacks of something green.

    What we need is to move further down the road of allocating costs to the cost-causer, and if that be Limbaugh, so be it.

    Also, I disagree that the sales-tax increase unduly burdens the poor. With all the exemptions from the sales tax, some rational some political, it is difficult to see where the lower income gets pinched for necessities like food and utilities, any more than they (or anyone else) already are. So the cost of the HDTV went up? Since when is universal HDTV a moral imperative?



  5. Concerned    Thu Apr 19, 12:14 PM #  

    The system needs reform, but Rubio’s plan is NOT it.

    For young people looking to buy a home, it could be a daunting task, given how much property values have shot up over the last decade (while salaries haven’t).

    And older Floridians, whose mortgages are paid off, may like to move into newer, smaller, homes. But the property tax difference makes that a non-starter.

    We need a solution that opens the door for first-time purchasers and bases the tax rate on actual use — not the “highest and best use”.

    The Senate plan, while not perfect, is much fairer across the board.

    Is someone going to spend enough to offset a half million dollars in lower property taxes? Not a chance. Especially when many of the richest residents don’t live in Florida full-time.

    Rubio is continuing to push our former governor’s failed policies. Even before Jeb came into office, Florida’s total tax burden was one of the lowest in the country. Under his rule, our services have crumbled, our schools are failing, and the House is wasting its time legislating how many extra rolls of toilet paper restaurants have to keep in their bathrooms.

    The House needs to get its priorities straight.



  6. Chris    Thu Apr 19, 02:33 PM #  

    Have you guys seen this in the Herald? Puts it into a perspective we all know: $$$$.

    http://www.miamiherald.com/multimedia/news/propertytax/



  7. hcgtv    Thu Apr 19, 03:19 PM #  

    We sold our Miami properties in the fall of 2005 and couldn’t be happier with the timing of our decision.

    After doing some searching around we settled into Charlotte, North Carolina. The house prices here are normal, not like the crazy prices in South Florida. Also, the people are laid back, nobody has honked at me in the last year and half and my blood pressure has come down.

    Would I ever return to Miami, maybe on a vacation.



  8. ellegitimate    Thu Apr 19, 05:01 PM #  

    Just like sales tax, the increase tax burden affects everybody. Higher property taxes mean higher rents, not to mention making it even harder to afford property for those who are lower and middle income than the sky high prices already have.



  9. Jonathan    Thu Apr 19, 06:20 PM #  

    Excessive government spending, not low tax collections, is the problem. Yeah there are hurricanes. So what. Hurricane damage doesn’t justify more public spending on baseball stadiums, mass-transit boondoggles, lousy government-run schools, socialized art, open space at the expense of the tax base, etc. How about making the government live within its budget first. How about finding ways to CUT that budget. Money going to government is money that doesn’t get saved, invested or spent nearly as effectively as it does if it remains in the hands of the people who earned it. Most of the revenues resulting from any tax increases are going to be pissed away, because that’s how government works. New revenues go mainly to fuel government growth and the demand for additional revenues in the future. The best way to make government live within its means is to reduce its money supply. Cut taxes, don’t raise them.