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Wednesday, March 08, 2006

Welcome Development: Property Tax Revolts

The Christian Science Monitor reports today that homeowners around the nation are increasingly angry about property tax increases. It is true that property taxes in many areas have been rising much more quickly than either the overall inflation rate or increasing values of homes, and not just for the wealthy but for everyone. These windfalls, moreover, are not being collected because the communities desperately need additional swimming pools in the local schools. (You should see the astonishing luxuries in most schools in decent neighborhoods.) No, the local governments are collecting these high taxes simply because they can: people living in highly preferred communities are at the mercy of their local taxing bodies, and the latter are increasingly taking advantage of local residents.

Citizens around the nation are utterly fed up with this legalized extortion and have begun to take action, the Monitor reports:

This year, legislative proposals, citizen initiatives, and lawsuits are on the agenda in at least 20 states. These new efforts reflect both residents' distrust of how their property tax dollars are being spent and concerns that rising assessments are driving working-class people out of popular towns and cities. . . .

"The intensity of outrage has not been this high since Prop. 13's heyday," says Pete Sepp, spokesman for the director of the National Taxpayers Union in Alexandria, Va. . . .

Revolt is in full swing in Incline Village, Nev., on the shores of Lake Tahoe.

There, Maryanne Ingemanson's tax bill is now $80,000 a year for a 5,000-square-foot house. She and a group of residents raised $400,000 to fund a lawsuit claiming recent assessments are unfair. Last week, 17 residents won a battle against the tax assessor when an elected county board threw out the new assessments.

Of course, many believe homeowners should be glad that their homes are worth more, says Ms. Ingemanson. But many people - especially the working class and those on fixed incomes - can't always afford the new taxes and have to leave. "This runaway taxes situation is driving people from their homes," she adds.

South Carolina last week passed a law that caps the increase in property assessments at 3 percent per year.

Many Georgia lawmakers are backing a measure to put a similar cap in the state constitution. The bill's sponsor, first-term state Rep. Edward Lindsey (R) from Atlanta, argues that it's unfair to hit homeowners with a big tax boost years before they sell their home and profit from its increased value.

"Not even the IRS is so bold as to tax people on unrealized gain," says Mr. Lindsey. "These are essentially backdoor tax increases that give government no incentive to be efficient or responsive."

I deliberately retained the mention of Lake Tahoe here, because I think it's important in that it is a relatively hard case with which to sympathize. It's easy to suggest that people living in very expensive homes in beautiful places such as Tahoe should be taxed higher than others, but I think that even the most wretchedly coldhearted socialist must see that charging a person $80,000 a year just so that they can keep their home is an outrageous act of greed and malevolence.

The value of these homes is indeed very great on paper, but the people living in these places are not actually benefitting from any increased value from their homes if they do not sell them (except for their ability to take out home equity loans, which is not a special advantage)—at which point they are no longer subject to paying the property tax! And of course, the burden is even harder on people of lesser incomes, as the Monitor story points out. This property tax revolution is a welcome development indeed, and I wish its purveyors godspeed.


Tom Van Dyke said...

California's famous Prop 13 rules. It pegs taxes to purchase price, not inflation or market bubbles. Without it, no doubt I'd have to sell my house, since its "value" has doubled, tho my income has not.

B.R. Merrick said...

"South Carolina last week passed a law that caps the increase in property assessments at 3 percent per year."

Oh, thank you, thank you, thank you for your benevolence, great government of SC. This is no way to solve the problem. The problem is government. The problem is taxation. Property taxes need to be ELIMINATED, not reduced in increase year-to-year. One of the many, many reasons I am still a renter here in NJ is because I don't want to continue paying rent if and when I have paid off a mortgage. YOU HAVE NO GOD-GIVEN RIGHT TO YOUR PROPERTY IF YOU HAVE TO PAY *ANY* GOVERNMENT ON A REGULAR BASIS TO KEEP IT. All I wonder is, when the "revolution" comes, will it be done at the ballot box, or will it be terribly violent?

Hunter Baker said...

Robert Kiyosaki, the famed "Rich Dad, Poor Dad" author makes a lot of this point about how you can never really own your property because of the taxes. It ain't a bad point.

Tlaloc said...
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