Why shouldn't you pay taxes based on your house value?
Discuss.
by
11/19/2006
Discuss.
Comments
Taxes on houses in NYC are not low just because of lagging valuations but they are assessed at a lower rate than a comparable multi-family dwelling. Up to 3 family are assessed at 6% of value while everything else is 45%.
property taxes = assessed value x assessment ratio x tax rate
Personally, I’ve always thought this was a sop to outer borough home owners who vote in large numbers.
Fairness is a much overused term. Is a progressive income tax fair? I say YES as an ex-70’s unreconstructed liberal. Many would say no, and the same tired arguments are trotted out–it’s unfair because it discourages risk-taking, etc etc.
The property tax is fundamentally “unfair” because the value I get in return does not increase proportionately as my property value goes up. On the basis of pure fairness, you should be taxed only on the squate footage and intended use of the property. That would, of course, encourage larger houses, and other societal evils (energy, land use, etc.)
There has to be some middle ground, and the CA rule (increase only on sale) is at attempt to make a societal (ok, political) decision that has many intangible benefits. It encourages stability in housing (shoot those flippers!) It makes it easy to predict your future housing costs. And if the public schools really “went to hell” (debatable,) maybe there should be a better way to fund them.
I say we should tax the capital gains on a house, no exceptions. This would dampen the increase in valuation, discourage flippers, encourage the use of a house as a place to live rather than as an “investment,” and decrease the national debt.
That said, I agree that if an owner is letting a property go to blight, there should be a way (other than eminent domain) to encourage him to change his ways.
Poster, maybe you should stop being anonymous and invent a name for discussions like these. makes it less confusing. Actually there are many people who can’t afford to pay taxes even tho they have a lot of equity. they bought long ago and don’t have the income to cover the mortgage that would be necessary to pay the “fair” taxes you are talking about. Some believe that that’s okay, and that taxes should be used to discourage “unproductive” uses of property and encourage people to sell now valuable property to those who can afford to maximize its exploitation and pay the taxes. I remember in Philadelphia in the mid-nineties there was one guy (Rappaport?) who had essentially bought up a lot of center city and wa just sitting on it. One suggestion to make him sell was to tax it at its maximum potential value (i.e if a two story could have a seventy-story building on it, then tax it at that rate). Again all these are political decisions. here in NYC we decide that big corporations and apartment building owners are in a better position to pay texes than single family owners. Perhaps in the case of you (and even a bit me), we could afford to pay a bit more. Have you sent you $400 refund check back to the city treasury? The bigger issue for schools in NYC seems to be the underfunding of them vis a vis upstate schools. You may be aware there is an ongoing lawsuit about that (actually the proponents of “full-funding” won, but the legislature is sitting on its ass responding).
Even as I read my answer I realize I am confusing two things. The base valuation is what has lagged (and some say over-all Park Slope houses are undervalued in contrast to Fort Greene houses)./ What I have been mostly talking about it the tax rate, which is lower for sngle family houses than the rest. Ther is no reason why we couldn’t have actual values used while still setting different rates for single family homes. It would be just very expensive to reevaluate all the NYC property and result in a lot of litigation. essentially , again, NYC avoids the hassle by looking elsewhere for its money (including city income tax).
I guess what I’m saying is that I’m a big
proponent of basing taxes on current
market value of houses. It’s never going
to be exact but it’s way “fairer” than
having a system that grandfathers people or
rewards a certain group of people over others.
If you are sitting on a lot of equity, you can
hardly say you can’t afford to pay the taxes.
The tax revolt in California has resulted in the
decimation of the public school system there.
You absolutely get what you pay for. Take the long-term view – if taxes double on my brownstone,
and more revenues go into the city coffers, it’s
a good thing in the long run. Services will
improve.
Uh, who is asking and why? If this is for some article you should tell us…
some jurisdictions have ongoing re-evaluations. My dad, living in rural Vermont (as tho there is another Vermont) expects a visit from the town assessors every time he adds a new bathroom or puts a new roof on. I remember Nassau county recently reassessed universally in order to become more fair. And it is more fair, however it can hurt long time owners who bought when prices were low and are not able to afford current prices (elderly, working poor, etc). To constant re-evalue would be to create a situation wher people would have to sell theoir homes because they couldn’t afford the taxes. NYC essentially undervalues single (up to three) family homes and transfers burdern to larger residential properties (inlculuding co-ops) and commercial properties. It is a political decision. The cap on increasing assessed values is due to a state law which also reflects the poltical power of small home-owners. That said my taxes are very low…
What? That’s a ridiculous argument – you
borrow $ based on the appraised value of the
house, you make a decision to buy based on
comps. There is a value – you don’t need
to sell it to figure it out.
Taxes on houses in NYC are not low just because of lagging valuations but they are assessed at a lower rate than a comparable multi-family dwelling. Up to 3 family are assessed at 6% of value while everything else is 45%.
property taxes = assessed value x assessment ratio x tax rate
Personally, I’ve always thought this was a sop to outer borough home owners who vote in large numbers.
Fairness is a much overused term. Is a progressive income tax fair? I say YES as an ex-70’s unreconstructed liberal. Many would say no, and the same tired arguments are trotted out–it’s unfair because it discourages risk-taking, etc etc.
The property tax is fundamentally “unfair” because the value I get in return does not increase proportionately as my property value goes up. On the basis of pure fairness, you should be taxed only on the squate footage and intended use of the property. That would, of course, encourage larger houses, and other societal evils (energy, land use, etc.)
There has to be some middle ground, and the CA rule (increase only on sale) is at attempt to make a societal (ok, political) decision that has many intangible benefits. It encourages stability in housing (shoot those flippers!) It makes it easy to predict your future housing costs. And if the public schools really “went to hell” (debatable,) maybe there should be a better way to fund them.
I say we should tax the capital gains on a house, no exceptions. This would dampen the increase in valuation, discourage flippers, encourage the use of a house as a place to live rather than as an “investment,” and decrease the national debt.
That said, I agree that if an owner is letting a property go to blight, there should be a way (other than eminent domain) to encourage him to change his ways.
Poster, maybe you should stop being anonymous and invent a name for discussions like these. makes it less confusing. Actually there are many people who can’t afford to pay taxes even tho they have a lot of equity. they bought long ago and don’t have the income to cover the mortgage that would be necessary to pay the “fair” taxes you are talking about. Some believe that that’s okay, and that taxes should be used to discourage “unproductive” uses of property and encourage people to sell now valuable property to those who can afford to maximize its exploitation and pay the taxes. I remember in Philadelphia in the mid-nineties there was one guy (Rappaport?) who had essentially bought up a lot of center city and wa just sitting on it. One suggestion to make him sell was to tax it at its maximum potential value (i.e if a two story could have a seventy-story building on it, then tax it at that rate). Again all these are political decisions. here in NYC we decide that big corporations and apartment building owners are in a better position to pay texes than single family owners. Perhaps in the case of you (and even a bit me), we could afford to pay a bit more. Have you sent you $400 refund check back to the city treasury? The bigger issue for schools in NYC seems to be the underfunding of them vis a vis upstate schools. You may be aware there is an ongoing lawsuit about that (actually the proponents of “full-funding” won, but the legislature is sitting on its ass responding).
Even as I read my answer I realize I am confusing two things. The base valuation is what has lagged (and some say over-all Park Slope houses are undervalued in contrast to Fort Greene houses)./ What I have been mostly talking about it the tax rate, which is lower for sngle family houses than the rest. Ther is no reason why we couldn’t have actual values used while still setting different rates for single family homes. It would be just very expensive to reevaluate all the NYC property and result in a lot of litigation. essentially , again, NYC avoids the hassle by looking elsewhere for its money (including city income tax).
I guess what I’m saying is that I’m a big
proponent of basing taxes on current
market value of houses. It’s never going
to be exact but it’s way “fairer” than
having a system that grandfathers people or
rewards a certain group of people over others.
If you are sitting on a lot of equity, you can
hardly say you can’t afford to pay the taxes.
The tax revolt in California has resulted in the
decimation of the public school system there.
You absolutely get what you pay for. Take the long-term view – if taxes double on my brownstone,
and more revenues go into the city coffers, it’s
a good thing in the long run. Services will
improve.
Uh, who is asking and why? If this is for some article you should tell us…
some jurisdictions have ongoing re-evaluations. My dad, living in rural Vermont (as tho there is another Vermont) expects a visit from the town assessors every time he adds a new bathroom or puts a new roof on. I remember Nassau county recently reassessed universally in order to become more fair. And it is more fair, however it can hurt long time owners who bought when prices were low and are not able to afford current prices (elderly, working poor, etc). To constant re-evalue would be to create a situation wher people would have to sell theoir homes because they couldn’t afford the taxes. NYC essentially undervalues single (up to three) family homes and transfers burdern to larger residential properties (inlculuding co-ops) and commercial properties. It is a political decision. The cap on increasing assessed values is due to a state law which also reflects the poltical power of small home-owners. That said my taxes are very low…
why do you expect taxes to be fair?
The city has its own valuation, though it lags market. I’m not complaining.
What? That’s a ridiculous argument – you
borrow $ based on the appraised value of the
house, you make a decision to buy based on
comps. There is a value – you don’t need
to sell it to figure it out.
You can only determine the value of a house by selling it. And then you wouldn’t be responsible for the taxes any more, would you?