How Our Property Tax System Robs The Poor to Pay For The Wealthy
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- Опубліковано 19 чер 2024
- Discover the shocking truth about a secret racket in America that's been hiding in plain sight for years; High-value homes are escaping their fair share of property taxes, burdening less wealthy neighbors and straining city budgets. Join us as we unveil the reverse Robin Hood grift that's affecting communities across the United States.
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Property Tax Project: propertytaxproject.uchicago.e...
Just Accounting Latest Updates: www.strongtowns.org/just-acco...
Links to some sources:
Chicago Tribune: apps.chicagotribune.com/news/...
NYT: www.nytimes.com/2021/04/03/op...
Graphs and Data from Urban3: www.urbanthree.com/
00:00 Intro
02:59 Who Is Affected
05:08 Regressive Assessments
06:59 Consequences
09:43 Are Assessors Bad Guys?
12:01 Appeals = Bandaid
13:11 How To Change This
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Too late to make this change, but I (Mike) was unaware the term fair share was such a politically charged one. In this context, fair share = legal requirement. People need to pay what the law dictates they should pay. Thanks for tuning in, and hopefully that becomes clear when you watch the whole video.
It doesn't make sense to pay for something you already have. The Constitution says the government cannot take away your property without due process of law
@@aaronfield7899 buddy everyone wishes taxes didn't exist but unfortunately the structure of human society does not yield organizational governments that exist for free. you want roads, electricity, and water? gonna have to pay for the organization that oversees those.
if you wanna appeal to the constitution for an argument that taxes are illegal, you are miles out of your depth.
you don't have to like it, but it's true.
@@maxchaotic there is a difference between pay taxes for something you just bought paying for taxes or something after you bought it.
I have no problem with income tax because that's perfect constitution property tax is not
@@maxchaotic ...One can be against certain methods of taxation, and not be against taxes in general. For instance; Gas tax, which largely pays for all the roads, is a very fair tax. The more one drives, the more gas they buy, the more they contribute to the roads they use. Even if you don't use roads yourself, but trek through the forest to the local convenience store for some milk, you contribute to the roads because the milk vendor rolls their gas costs into the price they sell to the convenience store, which would then get passed onto you.
Alternatively, Income tax is people laboring for the government, under threat of force and punishment, if they don't turn over the fruits of that labor (now take a moment to remember what sIavery is). In this context and in my opinion ...everyone's "fair share" is Zero.
Hola.no.entiendoo.de.esos.negocios.asi.espliqueme.en.español.okey
This seems like one of those issues that should be national news, with in-depth and systemic investigations into just how rampant the assessment gap is.
The wealthy wont care, aka the people who actually have power in this country.
Our constitution literally allows slavery(of prisoners) via the 13th amendment, we have the biggest prison population in the world, and it's mostly hidden if you listened to mainstream media. This issue is no different, it will be largely ignored by the neoliberals(both dems and conservatives) in power who benefit from the system.
Politicians don't run on policy anymore, well RFK might but that's besides the point. As funny as it is watching Pence and Vivek catfight on stage, it is very sad that politicians aren't talking about stuff like this that is actually affecting people's lives.
Can't bc they own you and everyone.. happens everywhere and bc 99.99% of us are good fair ppl, all we think is how could someone do this and then just go back to our jobs so they get rich. Welcome to humanity lol
The problem is the news is controlled by wealthy corporations that benefit from this system.
How is it national news? Nobody was even shot or anything
My house here in NC was listed for $80,000 for property tax purposes. I complained to the tax assessor that the home is overvalued and I was paying too much property tax. They sent an assesser to my home and he said it was worth $80,000. When I sold my home the realtor told me that $50,000 was the best offer. So, I had to sell my home for $50,000. So, the property tax in NC is completely corrupt and unfair. It doesn't matter if you appeal. They will gaslight and lie to your face.
Do you have an assessed value and a taxable value in NC? Up here in MI we have the Headlee amendment which says the taxable value cannot go up faster than inflation as long as the same person owns the property. Also if the actual value of the property is less than the assessed value then the owner can dispute the assessed value with the municipality and then a tax tribunal at state level.
@@dannydaw59 I think most conservative states don't have regulations like up North.
@jalicea1650 I lived most of my life in a northern state and the taxes were.exceedinhly high and jobs and income low thus increasing the wealth gap
@@greensorrel6860 I have family in the South and they get paid next to nothing and barely get any benefits from their state. Northern states have higher taxes, but better overall social programs, education, and depending on where you live decent infrastructure, though the North deals with more issues due to winters.
It's all dependent on where you live, what industry you work in and the services provided by your community. Northern states tend to provide better healthcare, education, and regulations which favor working classes. Wealthier people pay more, but due to stability of opportunity have access to better markets which provide better outcomes. Thanks to globalization this is becoming difficult for the North to sustain due to remote work, outsourcing and conservative states undercutting the Northern states industries etc.
Same in TX. You can 'appeal' but they just bring it down a couple grand and there's nothing you can do about it if you don't want to go in person and spend a bunch of your time getting nowhere in a court or whatever. Ours is based on market value / comps near our homes. So if the market is stupid like in the bigger cities, you're boned.
This is how the poor pay for all the infrastructure that the rich feel entitled to. As an insult to injury, rich neighborhoods are often flooded with amenities and public services that are denied poor neighborhoods.
Pretty much
as long as this countries existed it’s been the poor people putting their blood sweat and tears into work, only for the rich to get the benefits, and of course, a lot of racism “it was gods will we enslave black people/indigenous people to work on are fields” never forget that the country was literally founded on it
The trade off is the welfare system. They give people the government incentives to keep it going and supposedly to take thier minds off yhe real problem. It just starting to effect more people now. The truth is coming out!
Some of the "amenities" are paid for by the HOA of the community. They are not "denied" to the poor they are just not attainable to the poor because of the wealth issues in this country.
Note the public services part of the comment, I don't think PapaaSante was talking about HOAs, because that's in addition to taxes....Don't purposefully confuse the issues.
@@redtiger7268that's a separate thing. Plus, we still have these disparities even in places where HOAs don't exist. I only even know about them from UA-cam. We don't have HOAs where I live.
The system isnt broken. Its working exactly as intended.
Yes. That is the sad part. Also why rich people prefer a property tax system over income tax system. Hello Texas.
Exactly. Thank you. Government steals from people. That is their primary function. People keep voting "yes" for more local services and more funding, then actually feel cheated when government steals it in a way they don't like. That's like hiring a burglar to steal from someone else's house, then shocked when the burglar does the same thing to you later and claim the burglar robbed you worse. Unreal.
So true. We are governed by immature, irresponsible sociopaths. Intelligent people need to call them out for what they are.
The financial system has been artificially pumped for over a decade to ensure big pockets were lined; and now those same hands will make a fortune in the largest transfer of wealth in human history by shorting it on the way down. Inflation does have a role, but that's to keep everyone panicked, and focused on their bills and expenses, rather than focus on the capital crimes of politicians and corporations,I'm still at a crossroads deciding if to liquidate my $338k stock portfolio, what’s the best way to take advantage of this bear market?
Find those stocks with yields that exceed the market and stocks that, at the very least, follow the long-term market trend. However, you should get guidance from a financial advisor if you want to create a successful long-term plan
I agree, I've been collaborating with an Investment advisor for approximately 17 months. These days, it's really easy to buy into trending stocks, but the task is determining when to sell or hold. That's where my advisor comes in, to help me with entry and exit points , I've accrued over $337k from an initially stagnant reserve of $148K all within 18 months...
I need a guide so i can salvage my port-folio due to the massive dips and come up with better strategies. How can one reach this advisor??
Google Sonya Lee Mitchell and do your own research. She has portfolio management down to a science
I just ran an online search on her name and came across her websiite; pretty well educated. thank you for sharing.
Fantastic video, I remember listening to the Urban3 presentation at the national gathering in person and being amazed that property tax assessment was that screwed up. Hopefully shedding more light on this can get it fixed.
The room was packed! Let's hope this gets in front of the people who need to see it.
Lol no you tube video is going to change government. If anything the taxes will just get higher. Boiling frog.
@@strongtowns I’d love to see a follow up video about the role of the assessor, how to learn what they do & they’re limitations, as well as communities & their assessors that have transformed & improved and/or removed the inequities. This could lead some of us to run for the position if it’s a voted one and know what we’re getting into if we want to be part of the solution. Every state & county/parish is a little unique, but there are common aspects that can be foundational.
This is maybe the 2nd video I see on this topic, so please tell me how wrong I am:
There's no need to "visit" the homes to assess its value. Visit the websites of national (21 century, era, zillow) and local real estate developers and sellers to get an range of prices. Do the average and apply the tax rate.
The problem, according to this video, seems to be nepotism and other personal conflicts of interest in social context and, as usually happens, complacency of the people in power.
Start by making pressure on the official assessers to revalueate their homes. If they are forced to show how ylthey decide how much they should pay, maybe they'll have a vested interest in assessing everyone the same way, share that as public data (to avoid close doors meetings) and save tax money in appeals.
@@samueljackson856 People are already getting their state to get rid of parking minimums because of a UA-cam video, it is small, but it is something.
This unequal taxation also has the added benefit for the wealthy of convincing the poor that their problems come from the government.
Only issue a lot of problems do come from the government.
My area after the hurricane they won't allow people rebuild their homes because there lot size doesn't meet the new size zoning standard.
Government changed the zoning laws to bring in more tax dollar bigger homes increases the value.
Many individuals had investors call them less than 24 hours after being turned down for a permit to rebuild.
Every time they say they're building affordable housing a luxury apartment sign goes up when they near completion.
Government made a deal as long as one or two apartments is dedicated to section 8 housing they can build away.
My area
rental properties don't have a cap on property taxes
For rentals.
I have some clients who had their property taxes go up over $7,000 in 2 years on a small property. This leads to rent increase in the area .
Keep in mind home values have more than tripled within a few short years.
Idiots in my state voted to increase corporate tax.
In case you are unaware over 80% of corporations are in fact small businesses.
Unfortunately whenever a media brought up the new tax
they used names like Amazon, Google etc so people voted for it thinking it only affected large businesses
In reality it raised taxes across the board.
Tax increases across the board actually helps big businesses
small businesses already sell
their products higher than corporations
many manufacturers give you discounts for large purchases . Corporations can purchase more product getting it at lower prices.
Unfortunately the tax increase was the final nail in the coffin for some small stores. They close down now their former business goes to the big chains .
Yes they do if not the tax laws would be fair, notice how most politicians become very wealthy on a civil servant salary
@@shiny8733 the rich buy off conservative politicians to lower taxes on the rich, you will always see conservatives crow about how great having no state income tax is yet they pay wayyyyy more in increased property tax than stated with an income tax which overall has you paying more than just being taxed on income with a smaller property tax
@@shiny8733unfair taxation comes from private interest lobbying, government doesn’t just do things all on its own free of political and economic influences. Taxation and government can be and should be used to make society work better for everyone, it’s private interests that fuck it up.
This is a poor explanation of the con that is right-wing political narratives and propaganda.
The very people who do this in government, are the ones selling it as the problem.
Vote for them so they can do more of it, and then tell you the problem is worse and you need them even more.
Right-Wing Conservatives are gullible and ignorant.
I was so confused the first time I got my home assessment in the mail after buying a house. I was super worried, because we bought a $430,000 house, and now it's being assessed at like $300k or something like that. I was freaked that I super overpaid and that I wouldn't be able to get back that much when we went to sell. My wife then explained that those values don't mean anything when it comes to selling your house, they're just for tax purposes, so the lower the number, the better for us.
I still didn't really understand why we would have such a discrepancy, but I was fine with it because we already were paying ~$15k in property taxes, so it would have been like $25k if it was taxed at the zestimate rate. It sucks that this seems to disproportionately favor the rich, that's not something I knew about before this video.
Check out the data for your city or country on the property tax project!
@@strongtowns I guess my main question that I'd love to see in a follow up video is "why is there a difference between Zillow's Zestimate/realtors' estimated home selling price, and assessed property value?" I see one comment below talking about freezing assessed prices for seniors, but why doesn't the estimate reset when a house is sold? Why doesn't it keep up with Comps in the neighborhood every year?
@@RobinClower Most I've heard is that the assessors estimate is a "purely tax" purposed value, and the one that people actually pay for is the "fair market value" i.e. assessors value based on the general characteristics of the home like square footage, lot and land size, type of home (single family, condo, agricultural residence etc) and real estate agents price based on more abstract factors like say the neighborhoods desirability, average sale price for other homes nearby, certain features (stainless steel appliances! cul-de-sac! HEATED FLOORS!!) In other words: almost completely arbitrary. Like really the line between assessor and FMV is only if you've gotten your RE license. In certain jurisdictions like some communities in Pennsylvania, there IS no difference; whatever the assessor decides the home/land is worth, the RE agent or developer or whomever cannot appraise above or below too far from that value.
@@user-up7rl6nb2c it's more extreme than I thought. I pulled the 300k out of a distant memory, I just checked and the actual assessment was $150k
@@trashrabbit69 that's good info, and I'm not arguing with you, but why aren't the two numbers similar and the cities just tax at a lower rate? Like if I'm taxed at 10% for a 150k estimation, 15k a year but the home is worth $450k, why don't they just assess at $450k and tax at 3.5% for 15k?
Us Americans should be ashamed at the fact we are paying taxes on something you own. Your local county can use sales tax to pay for all the services that “property tax” pays. It is unconstitutional and illegal.
I saw this problem in Washington D.C. years ago. Longterm residents could no longer afford to pay their property taxes. Many multistory row houses would eventually fall into disrepair to the point that the upper floors were collapsing into the lower level.
School district around the country rely heavily on funds from property taxes, making pathways to higher incomes more difficult for residents in low income areas.
Then there are people that have multiple homes such as rental properties and vacation homes, homes for income generation or short term leisure. The property tax system is incredibly regressive.
Property taxes shouldn't be paying for this. Local sales and income taxes would be less regressive, especially if the sales tax were stepped (0% for essentials, 15% for basics, 30% for luxuries).
@@yuki-sakurakawa No matter how the taxes are collected, there is also a problem with distribution. Kids don’t get to pick their parents income level. Parents with higher incomes can pay for extracurricular music programs, sports programs, and private tutors. Funds need to go to kids that also need such help, but can’t afford it. These things used to be standard for public schools.
At least DC has an income tax. It's much worse in the south (I know many think DC is the South). See Birmingham, Alabama. The city tries to levy an income tax, but has no real way to enforce or collect it due to a dysfunctional state. In Texas, regular people suddenly have $20,000 annual tax bills.
@@benzapp1 Yes, there is always someplace that has it worse. It certainly doesn’t make it acceptable. One can also say that at least Alabama has voting representation in Congress.
@@barryrobbins7694why should dc have House of Representatives representation
"reverse Robin Hood" or in other words " business as usual." Giving money from the poor to the rich is how a class system functions
The top 10 percent of earners paid 74 percent of all income taxes and the top 25 percent paid 89 percent.
It is how _capitalism_ functions.
@@denelson83 Bottom 40% of people pay negative tax rates they are net receivers of tax dollars. What capitalism does is change everyone from average lifespan of 45 to 80, create the wealth and infrastructure to bring education to billions of people, and put the entirety of collected human knowledge in the pocket of anyone for 25$ a month. What socialism does is starve/purge 100 million people to death to try to compete with the efficiency of capitalism and to stomp out the rampant government corruption that socialism incentivizes.... and still result in a failed state. Good luck with that.
That's the great thing about videos like this - you see how poorer people lose what money they do have, and thus can understand why they're not paying much in income taxes.
@@Bmike5117 Top 10 percent earners also spend a vastly lower percentage of their income on necessary goods like food basic shelter.
I work in local government and this is a huge problem for our communities - large and small.
I just had this happen to me, i bought my property for $120,000 in 2021, tore up the whole house and somehow now its worth $170,000 , visited a fiscal office and got an assessor to come out and re-asses the property and totally agree with me, waiting for a new price assessment as of today
this is literally happening to me. The tax assessor valued my property at fully twice the value that the real estate agent says we'll get for it. We literally have to sell my house that my family has been in for six generations now because of this.
I hope you can appeal it!
Why not just do some property value “improvements” aesthetics wise in the front yard, back yard, interior, paint radical colours inside or tear up room renovations and leave them in disarray, and get a NEW assessment for much lower??
Remodel the interior to awkward room sizes, bad layout etc??
You can try to appeal the assessment with your county. A family member had a half-built home due to running out of money in the middle of its construction, and the county appraisal district was trying to value it at full price, because all they had were pictures of a finished-looking home from the outside. So they appealed, took some photos of the state of the property, which didn't even have any walls inside or working utilities yet, and pointed out how it'd be impossible to sell at the value they were taxing it at.
@@Matt-zp1jn with what money?
@@Matt-zp1jnthat will be expensive as hell
This happened to us in Chicago (in a Black neighborhood) while they give Lincoln Park those tax breaks. My condo board sued and won, bringing our taxes back down but we had the money in assessments to do that; I’m not sure single family homeowners could do that
There was a method in history for people to self assess the value of a good for tax purposes. In some areas merchants wanting to sell their goods had to report the value of these goods themselves and pay taxes based on that value. The thing keeping people from underreporting this value was that the government had the right to buy up the goods at the reported price.
This system isn't perfect but maybe some aspects of this could be reused to keep things in check
Wow. That is hilarious. I'd love a system like that.
That honestly sounds like one of the best ways to deal with taxes in general. Individuals can set their price but they are locked into that value. Although for homes that doesn't work. Possibly implementing an increase in sales tax on the purchase versus the later sale price of a home would work. IE if you buy a home priced at 200k and pay property tax based on that value for 10 years, then sell it later at 400k you have to make up the difference in property tax value in the sale price of the home.
@@joefer5360 Would you? How does "the government" afford to pay for the goods (your house) at the appraised value?
They take other people's money (and yours) to buy the property.
And then what?
Sell to their "friends" at less than market value, because gov't doesn't need to turn a profit / break even.
That's a terrible way to live!
@@xylker It definitely seems like a system that works better for goods and services, than for real estate. But, in the context of those goods and services, it definitely seems like it's a good way of keeping people honest.
Agreed. If your home is assessed for less than it's worth then any buyer should have the right to pay the assessed value plus 5%. And if your home sells for less than the assessed value then the city government should have to make up the difference, or at least rebate you all the taxes you paid at the higher amount.
I just got my tax assessment. It shows a 269% increase since 2019. This means an extra $400/month that I pay in taxes more than I did in 2020, which is 10% of my total income. It's insane
In my area property assessment increases are capped at 3%. That is to protect people on fixed incomes.
When a home sells the selling price resets the assessment. My uncle's sold my grandparents home of over 60 years in 2021 and Zillow says that the new owners are paying $4200 versus the $1350 that my grandparents were paying.
That tells me that how recently the home was sold plays a huge part in property tax assessed.
It also tells me that inflation has been much higher than 3% for decades.
The state I’m in is capped at 5% increase in taxable value from year to year. New home owners are really getting slammed here. I’ve seen people’s taxes go from $3000 to $10000 in one year due to their new ownership.
Caps also make things unfair. New homeowners end up paying more in taxes than property owners on the beach in my area. It's not fair.
Home prices have out paced inflation. This is why people under 40 can't afford to buy a home since pay has not even kept up with inflation. Let alone the insane property value increases.
California is capped a 1%.
Umm, wouldn't it be better and fairer just to tax per square metre/foot of land? You can have an urban area multiplier (eg ×1.25) in urban areas as opposed to rural, since they get more access to amenities. Never understood this assessment system. 240 square metres is 240 square metres in 2024 and 1994.
Judging how political power works, if an assessor were to apply taxes more evenly my guess is they or their elected officials would be run out of office by people with enough money and free time to push to re-enact regressive taxes
All states need to enact laws whereas property is limited to how much it can increase in value so long as the owner does not sell. When someone buys a house for $200K and lives in it, even if it is worth $500K, increasing the tax liability on the owner is, in effect, driving him/her out of his/her house. If s/he could afford a $500K house, s/he would have bought one! Something has to be done. Half of our RE tax goes to pay for public schools. What do we get for that? Uneducated kids. A bunch of paper pushers making more money than actual teachers. Another welfare program as schools (in my city) provide breakfast, lunch, snack and maybe dinner to at risk students. If welfare is NOT addressing hunger, maybe we should address our elected officials and maybe they can take some of the money they are sending to Ukraine and use it to feed our kids.
@@MsGrowltiger this is already a thing in Texas. The where we have a progressive tax liability that slowly increases over time as a property's value goes up. If a owner were to sell the their house, the next owner would pay property taxes at the current value of the home. But I think even this is against the point the video is trying to make since by progressively increasing property taxes, you're still regressively taxing poor young people entering housing markets or older poor people transitioning from renting who after a life time of saving can only just start a mortgage.
Housing should be decommodized by increasing housing supply by competing with the private market using good quality government subsidized housing that isn't just for poor people. They should be built with mixed income owners or tenants in mind. More supply decreases demand lowering property taxes by spreading the tax burden among more tax payers that aren't paying landlords to just suck up their money as passive income to buy other property, luxury goods and to live off of.
The last thing we need is to make it easier to own excessively large homes imo. Esp with the lack of inventory for reasonably sized homes.
It's none of your concern what someone else owns.
@@scottysgarage4393it is a.concern when large corporations are buying up starter homes and charging excessive rents
The only inventory that cannot be fixed is land.
It doesn't matter if home on land is small or big.
Its even better when there is big multifamily house, instead of small on same plot of land.
@@scottysgarage4393it is if we are paying higher taxes and they are not. That is what is happening. The city people pay the extra costs of servicing the mcmansion neighborhood. If they want to live there, then pay more taxes for infrastructure.
I once worked for a real estate developer and can tell you first hand there is loads of intentional secrecy and obfuscation that goes on in the real estate industry to prevent tax assessors from producing a true estimate of the “value” of some of the most expensive buildings in the city
Can you share some examples?
Spill the beans bro
Having a difficult time getting an interview with assessors is pretty telling in and of itself.
Eh--it could just be that they're afraid of saying the wrong things, or of having a target put on their backs. There's a reason we don't regard silence as evidence of guilt in this country.
We always have to have an enemy
@@sinisterdesignHow could you say the wrong thing when you're just talking about your job?
Why aren't these kinds of video more popular? These are real issues we need to address!
We are working hard to add more cats and puppies. LOL. Kidding aside, Strong Towns is the epicenter of straight sourcing civic information!
No mercy for boomers with $1M homes who cries about taxes.
I will never understand how an open market sale of a property doesn't automatically reset the assessed value to the sale price in any jurisdiction.
Probably because people would "sell" their homes to another family member for little money and abuse the system.
In California it does, but unfortunately Prop 13 has caused a host of other problems. There needs to be a sunset provision if we keep it at all.
It actually does, when reassessment comes. They do collect sales data, improvements cost, and etc. One of the problems, that it is not very transparent and no easy way to for non expert to review. Second, is problem of perception. It is relative value of your house to rest of the other houses in town makes difference, not the real value at todays prices.
@@abupinhus nope. My State uses a base year system. My assessment was fixed before I bought my house and neither my offering price nor the value I used to refinance have in any way affected that assessment.
@@mikerooney7600 it only causes a host of other problems from your own viewpoint. There are many benefits from it and it’s not the rich who benefit. These are elderly folks just looking to retire on SS.
The greed always comes from the government and it’s workers. Outrageous salaries and pensions.
System is rigged to rob from the hard workers and give to the lazy.
Keep up the great work, Strong Towns. My experiences every day here in LA, from how isolating the city can be, unhealthy and dangerous, and expensive makes me think that the work of urbanism is more important than ever.
I’m glad he brought up Illinois. I appealed my taxes twice. Once with an appraiser and attorney and all of the arguments were dismissed. So the next year I did even more research and presented more evidence. All dismissed again. It appears the rules on how homes are appraised are unknown and change. Every home I have ever owned / sold / bought - there’s a pretty standard of price per sq foot of living area. When I compared mine to other homes in the area, their price per sq foot living area was under $100 and mine was over $400.
A fancy well built new home will get a higher $ per square foot than a dumpy run down house next door to it.
Generally in Illinois the magic number is the median AV/sqft of properties with similar age, sqft, and within 1 mile of the appealed property
@@mtzzero there are 0 comparables because of this being a custom build. For financing, the bank appraisers had to go out of county, as did the one for my appeal hearing. I also have 4 wind turbines within 1/4 of a mile and can’t find that really anywhere else.
The best example of taxation without representation
A very good book on this topic is 'Perverse Cities' by Pamela Blais. Basically high-density areas that cost less for the municipality to provide services subsidize low-density, high-cost areas
It's a big part of ST's research and stuff people like Charles McMohan talk about; suburbs are basically leeching off of and being subsidized by cities. If suburbs were forced to pay their own way like cities they'd be empty ghost towns because no one other than the rich would be able to live there.
I don't think high-density areas actually cost less... they cost less PER PERSON, which is a critical distinction. A road in a downtown area might cost 3x to repair, but it serves 10x the number of people.
@@Joe-ij6ofOP said the same thing but in a simplified manner. Simplifying information is critical to effective communication especially when the target audience are not experts on the subject
@@Joe-ij6of Even per person the environmental impact and cost to support density is actually higher. From an overall energy perspective the low density areas are problematic but make no mistake their "needs" from a public service perspective are actually far lower than high density neighborhoods pretty much anyway you slice it. In your hypothetical example the road serving 10x the number of people requires more maintenance and must be redone more often.
@@shaunbava1801 1. 10x usage does not require 10x maintenance. There's something called economies of scale. You don't run a pizza shop with a fleet of home ovens. Dense areas have more infrastructure built to accomodate more people but they also go on in shorter distances. So in expense to benefit ratio, they are more cost effective.
2. In high density areas, the transportation behaviors are different. They take more public transport, walk more, bike more. Which means their contribution to the wear and tear on the public infrastructure is much much less than somebody who drives a 2 ton vehicle everywhere for 2 hours a day.
3. Heating and cooling are the biggest energy uses of any building. Big buildings are more energy efficient in terms of climate control than smaller homes because they have less surface area to volume ratio. This means the flux of heat per volume (and per person) is much less in big buildings. Homes in dense areas tend to be smaller as well.
4. Dense places are more efficient to deliver to. A mail man delivering to a suburb with 50 houses has to travel much longer than in 1 building with 50 units.
I asked the clerk to explain a value on my tax bill and she proceeded to calculate it. She
went through a variety of gyrations and finally figured it out.
Showed me how "simple" it all was.
Property tax is the most scary thing about USA, in Ireland i pay 300 euro tax and 500 euro insurance for the whole year for bungalow worth 320000 euros. Period.
The system IS working...exactly as designed.
Then it's our turn to destroy it
@@Dzztztsign me up.
It’s actually the time when you can actually be taxed out of your home, even if it’s paid off
Keeping home supplies low and pricing out current homeowners forcing them to rent or become homeless; what has America become?
I live in Texas and I have heard a couple of wealthy people say they "know a guy" for taxes.
This is one of those things where it's not necessarily that there's something fishy going on but that you can afford to have a tax guy find all the legal tax avoidance you can. Kind of like being able to hire an attorney instead of a tired burned out court appointed one.
@@bradspitt3896 That is what I meant.
Thanks for bringing this information to the public. I wish someone would do the same research on homeowner’s insurance premiums. It’s causing people to be forced to sell their homes or go into foreclosure.
Insurance premiums are a function of risk assessment vs replacement costs, not tax value assessment. Insurance companies have whole departments of mathematicians that do nothing but calculate these numbers. Property taxes would be a lot less regressive if insurance actuarial methods were used to determine property tax rates.
The biggest issue is that property tax can force people off of property that they own.
The biggest issue is that the rich are parasites
Land Value Tax would solve this
Doesn't a land value tax still involve an assessment process to determine the site premium?
@@eliottwiener6533you are correct but the Georgists are a bit of a religious cult who think lvt will solve all of the worlds problems
@@eliottwiener6533 Land value isn't as subjective, since you're not taxing the property atop the land. I should imagine it would be easier to construct a fair statistical model of land values in a city based on factors like proximity to services, infrastructure, etc. With property values, you have to appraise the value of a lot more intangibles like the condition of the property (which truly needs an inspector to make sure there aren't serious problems lurking beneath the surface), etc.
I would still expect that it's not strictly easy to build a good land value appraisal system -- and you would still have to contend with monied interests wanting an easy-to-manipulate appraisal system -- but an appraisal system based more on hard statistics and tangible quantities I should expect would be a little less ripe for abuse.
There still might be regressive appraisals if high value land is under assessed
Edit: but yes I agree that land value tax is 100% a huge fix for cities
It wouldn't really though, because then the wealthy would be taxed even less if their house wasn't taken into consideration
Great video. We really need groups identifying this unfair and arguably illegal behavior. There should be a class action lawsuit against the state.
A few years after I bought my house, in a low income neighborhood, the city increased property taxes by a significant amount. When I went to appeal they had all this supposed documentation about improvements that had been made to my house but none of them were true. I was very confused because my house hadn't been updated in literal decades. Even with photographic evidence that those improvements hadn't been done they still denied my appeal. Luckily I found out about the homestead act which did decrease it some but even with that I'm currently paying about $2,000 more than I did 7 years ago. My pay hasn't increased in that time so I'm having to stretch my budget further and further.
Government is the problem. We are supposed to be able to own our property but we pay taxes on our property….ridiculous. Do we own it or does the government? And there is too much waste and abuse in government…I don’t trust them to spend my hard earned money.
And starts the downward spiral that eventually stalls the whole economy. Our country is not designed to be able to run like this. That is why things are hitting the shitter really fast
First comment: the wealthy can(and will) dispute an assessment, the poor don't - this is 90% of the problem.
Remember this why would any wealthy investor want these laws to change when it completely benefits them in the end and they literally can get the best deals on land/homes sometimes even for free or steal it out from underneath you? Sadly the governments and investors only care about the profitability in the end.
I can already hear the opposition to this, "oh but we have to ATTRACT wealthy people and wealthy business owners, by giving them every incentive, discount, and tax break, or they will (dum-dum-dahhh) go elsewhere!"
this goes hand in hand with the other strong town statistics showing how all suburban areas are insanely subsidized by the higher density city centers. these large homes are not only not paying high enough taxes per their assessment, but also not paying enough as a whole compared to the insane amount of infrastructure it takes to keep those neighborhoods alive
Don't paint all towns with the same brush. My city is broken up by townships and cities within the big city, like most places. All taxes for my house are for my county which isn't a part of the city county.
@@matejovich So you never use big city services while only paying your local county?
Taxation is extortion.🤡
Such fascinating and impactful research. Had a great chat with Lanier and the Urban3 team at the Strong Towns gathering when they presented this project. Love what they're doing.
Property tax should be illigal. The fact you never truly own your home is insane. Where I live in San Antonio the expensive homes definitely pay the most. Many valuable homes and even mid priced homes have taxes higher than the mortgage.
That’s the reason I got rid of my relatives house. The property tax in Texas was too high.
I was just dabbling in the property tax project for my county, and I've got to admit, it's still pretty challenging for me to understand exactly what I'm looking at. It might be helpful to be directed to some examples of people going through their own area so that I can grasp my own situation. Thanks for this. I appreciate everyone doing all this work to help create a better system.
We purchased our home for $300k and just found out that it was assessed at $340k. So I am definitely hoping to understand more here.
First question that needs to be answered is what is the purpose of property taxes? Is it to pay for the services provided by the town/city? Or is it another form of income tax? Larger properties will often receive more service - water for example, but likely not 2 or 3 times as much service. If property taxes are to be a wealth or progressive tax, then be honest about that and change the basis for the tax - total household income for example.
Property taxes are a cities largest form of revenue. So road maintenance, water and power line infrastructure, garbage, police, fire fighters on and on.
The problem isn't property tax, it's a society built upon needing car dependant single family housing for millions of people. It was never sustainable, it was only something we could kick down the road 50 years or so.
Basically the only way to correct the mistakes of the past are to make suburbs gravel roads and such.
A close friend of mine put her house up for sale once the property tax bill hit 10K. She sold the house for about 270K. Across the street were condos. That same year, one unit sold for 50K yet the seller only paid $250.00 a year in property taxes. How does this make sense? Bottom line is you do not really know what a property is worth until you put it up for sale and then sell it. This assessment racket is a scam. It may be somewhat fair in housing developments with cookie cutter houses all the same, but does not work very well outside of that
As long as the primary revenue generating system for municipalities is a property tax system, making more accurate assessments would absolutely help prevent the rich from cheating taxes so much. The real solution though is to only tax the land, and not the structures built upon, thus encouraging more efficient land use, and incentivizing government action to zone for more effective use. Henry George had it right.
Exactly, the entire concept is wrong. Leave the wealthy out of it for a moment, collecting taxes based on nominal values of very illiquid assets means that you have created a very regressive tax policy that tends to push people at the margins into substandard housing or homelessness.
I have a feeling that disregarding the value of the land is a big part of the problem here. Assessors seem to be laser-focused on the physical aspects of the property, whereas in reality a large part of the value of a property is the context in which that property exists, which a land value attempts to measure. Having even a split-rate tax system, which includes a separate tax on land value, would force the municipality to consider this, at least.
The government does not properly fund assessing departments. The technology that is available to them is typically outdated, the amount of staff is never enough, and the laws that are created make the job more difficult year to year bc no legislators will simplifying that tax codes bc they don’t understand the work load they are creating.
In cook county which has a split rate. Assessor Kaegi just tacks on value increases due to location onto the improvement value instead of the land value
I’ve know assessors that have had to leave public meetings with armed guards. It can get wild when tax laws change or when the current laws are really putting the screws to property owners. Legislators really need to start stepping up to improve how property taxation is done to begin with.
But it’s plausible to happen such steep growth in property taxes even with “fearer” law . It’s market condition and it’s good that it’s happening, otherwise we would be in post Japan bubble burst. I prefer the burden cost of you to your city or the option to not pay property taxes, but transfer ownership taxes( pay everything when you’re selling your house)
I looked at the site for my county, and houses in the lowest percentile are taxed at double the rate of the highest three percentiles. The difference in the two is over a million dollars in value
Every year property tax goes up but the past two years, it's been out of range. Almost frightening that my property tax is more than my high mortgage. Most people are forced to sell their homes that they lived in for all their lives because of the increase every year. Someone is taking advantage of the people. What can we do.
What if every homeowner in the town or county chips in a small amount of money that goes towards a lawyer or a law firm and they fight to control the over taxation of our land? As it works right now, each person appeals their assessment separately, but if we fought taxation as group we would have a better chance. It doesn’t seem like the people we pick for city council or government are willing to help us.
The issue here as far as I can tell is that almost none of these properties are actually over-assessed. Over-assessment is much easier to appeal, especially in neighbourhoods with lots of sales, and for people with high amounts of income, education, spare time, or connections. But if a property is already under-assessed, it's almost impossible to prove that your property should be under-assessed MORE to keep in line with your neighbours or other neighbourhoods.
An alternative way, in my opinion, is not only to re-assess all properties to be more in line with market values, at the same rate of under-assessment, but also to implement a progressive tax scale. If you just raise the assessment for high value properties, those people will appeal and appeal until they get the assessment THEY think is fair, instead of an actually fair system. However, if you adjust the property tax brackets, you can still assess the lower value properties fairly, while at the same time giving them a much needed tax pressure break, and charge a higher amount of taxes for high value properties without giving them as many opportunities to appeal. Appeal is good, but not if it gives unfair advantages to only a select few.
The problem is this makes it even more profitable to hold onto vacant land or parking lots as a speculative investment. What we really want is a land value tax + a fairer appraisal system so that we don't just get a bunch of land speculators holding onto valuable land, paying pennies in property tax, and accruing a lot of appreciation that they can cash out on later. With a revenue neutral shift to land value taxes, we encourage people to develop vacant or underutilized land into new housing, which will improve overall affordability and cool the upwards speculative pressure on land prices. The revenue-neutral shift would also generally reduce taxes for most average households, with vacant lot and parking lot owners bearing the brunt of new taxation.
@@ulrichspencer That's a good point. I come from a country (the Netherlands) where vacant plots are almost as expensive as plots with buildings on them, so the property taxes on both are roughly the same.
Strong Towns themselves actually advocate for a Land Value Tax instead of a Property Tax, as Property Value is subjective but Land Value is Objective (based on amount of land owned and what it's used for).
If we're going to just redo all the assessments, might as well throw out the whole bad code and replace it.
@@randomlinuxuser A land value tax doesn't directly address the issue raised here, though... you could be rich and live in a hovel and barely be taxed at all!
Are you talking about milage rates?
The system is working exactly how it was designed to
They paid taxes in the amount of 40% to 60% of their homes' values?! If that's accurate, then it's a racket.
Their homes were assessed as 40 to 60% of the value, they weren’t getting taxed 60% a year lol
I filed a property tax assessment in Indianapolis. 5 years later I got a notice that a meeting to discuss my protest was scheduled. I had already sold the house at that point. Property taxes jist shows that no one owns anything. Even if you "Own" your home it's not your home. You still owe your yearly government rent.
When I bought my property, the real estate agent warned me that if I ever caused a fuss with the local authorities that my assessment would be boosted.
I remember attending the HOA meeting for the giant building in in, and they talked about the appealing for lower tax rate. They have the money to do it, and it's a lot of old people in this building with established connections. They're very successful at it.
This actually sheds light on why property taxes DON'T WORK and it should be abolished. Not only are they not fair in their application but even if it was fair it still screws over most people who's income doesn't grow or doesn't grow at the same rate as property values.
That everyone as everyone a consumer
Also, it’s not fair to farmers, such as small farmers that the property or farm has been in their family for generations, and sometimes they’re barely making a profit, but the value of their land is going up because some subdivisions have started going up near them
I am a big fan of Strong Towns, but as a former appraiser for a county in Virginia, there are a few problems with this video, possibly because of the lack of being able to talk to appraisers.
Elderly people with fixed incomes were mentioned. Many localities, including Asheville, have relief programs for the elderly and disabled. Where I worked, if you were 65 and had under a certain (fairly significant) amount of assets or income, your tax assessment can be “frozen,” where it won’t increase year by year with the market. This is a big help for this type of person, and Asheville seems to have a program that works differently but has a similar effect.
There are clearly problems with the assessments in these specific localities, but I do not think this is a country wide systemic issue with the way that assessors are supposed to value property. Per the International Association of Assessing Officers, localities should be using the measure of Price Related Differential in order to make sure that low valued and high valued properties are being increased at the correct proportion. There is a standard for what range is considered acceptable, and I highly doubt they met this standard here. In Virginia, the state monitors these numbers, and it sounds like the state of NC needs to look at their localities and make sure they are doing what they are supposed to be doing.
Glad you're here! Dr. Berry's nationwide study argues that this is a nationwide, systemic issue. Some areas are certainly better than others. We didn't have time to get into this in the video, but in NC, the "punishment" for larger counties is that they need to reassess within 3 years. The standard is already 4 years. For smaller counties, it is essentially a verbal warning. Dr. Berry touched on the Illinois side of accountability as well. The numbers themselves also can be cherrypicked, removing outliers before being sent to state agencies. The level of accountability for data reporting integrity is very low. Good to hear Virginia is doing well! I'll poke around VA in the property tax project.
Where I worked, the county has their own assessing dept and we did annual reassessments, which goes a long way to keeping up with accurate data. A lot of localities contract out their assessing to private companies, and only reassess every 3+ years, which causes a lot of problems
Freezing assessments for wealthy property owners is super unfair. California's Prop 13 gives endless examples of people with $7M mansions paying only .1% in annual property taxes.
Instead, governments should allow people to defer payment increases until they sell or transfer. If your property taxes go up, you can still pay the old amount, simply make up for the difference later on.
@@AerysBat the freezes aren't for the wealthy, they are for low income elderly people
Edit: you keep editing your comment and the CA comment wasn't there before, yes that is super messed up there but that is not the same type of freeze I'm referring to
"if you were under a certain (fairly significant) amount" isn't that not low income? Or do you just mean significant for a poor person?
This was a really good video. Can't wait for the video on the Land Value Tax!
I grew up on family land 30 miles north of Charleston S.C., and we lived on 5 acres of land in a mobile home. We didn’t have any city taxes, only county taxes. When I was in high school in the 1980’s, my dad complained about his county taxes. After some research, my dad and I found that he was paying county taxes at a rate slightly less than people with million dollar beach houses on the Isle of Palms or the multi-million homes in downtown Charleston. Now people might say, “Well it is 5 acres of waterfront property. It should be taxed like that!” It was 5 acres, but 2 acres was marsh/wetlands so it was not viable for building or selling, and we had a mobile home on it, which never appreciate like a built home. When my father drove a city bus in Charleston, he would pass through a lot of lower income areas in the downtown area. If you go down there today, you won’t see as many as there were in the 70’s and 80’s.
My father worked as an assessor for years so I know a bit more than most about the system. And I think you did a good job explaining it. Assessment is difficult. A lot of people tried to send dogs after my dad when he would go to a house when assessing property. Also the point about only certain people appealing their assessments was definitely true. A lot of the big franchise owners would be like "oh this property is only worth 2.5 million" "it's assessed at 7 million" "well this property next door is only 2.5" "that's a parking lot and you are a Wendy's" for an example (the Wendy's owner would then lose).
Oh my gosh, finally a great, concise, well-produced video that wraps all of the Strong Towns interviews and presentations on this important topic into one video I can share with my normie friends who wouldn't want to watch an hour-long powerpoint presentation that I would happily rewatch or an hour-long podcast I would happily re-listen to. Great work.
This aggression must not be allowed to stand, man. Good video. Insightful and well informed. Thanks for making and sharing it.
California sought to fix this with Prop 13 (with caps annual increases in property taxes irrespective of increases in assessed value).... then majorly goofed by allowing* it to apply to commercial properties and non-primary residencies.
*Some say this is a feature, not a bug, and there is strong evidence that this is the case going back to the original proponents of Prop 13.
Prop 13 was one of the most destructive public policies any state has enacted.
One Professor of Economics at the University of California (Riverside), Mason Gaffney, studied the effects over many decades. Look for his papers on California's economic problems and the solutions he recommended that fell on deaf ears in Sacramento.
i was looking around Naples FL property taxes.. my in-laws home was assessed at 80%... the expensive coastal homes were at 8-10%... think of it this way, in-laws home is worth about 450k... the coastal homes are about $30m.. that's a tremendous amount of "missed taxes"
@@youtubeuser1052 There is an argument that land value taxes make more sense than property value taxes.
In Goergism the taxes are not just designed to cover the cost of delivering services. They are designed to discourage land banking, encouraging efficient land use. The surplus would them be paid back to residents as Basic Income.
Awesome. Thanks for sharing. This is huge. I want to become a more involved voter and constituent in my area.. I think that this video was a good boost that I needed to start writing letters to my senators and legislators here.
THANK YOU!
My property assessment came back 25% above what zillow estimated it. I was dumbfounded when I saw it, so I am currently protesting the estimate. Hopefully I can get it down at least a bit.
They want to tax you high so you have to sell it to them for cheap
Property tax is absolute theft in the worst degree. You dont even own your home anymore, you’re just paying rent to a landlord that will throw you in a cage for being overdue.
Yep. Taxes are straight up theft and bullying.
It could be fixed but people are comfortable with it. Back in "old days" a guy could be absolutely penniless but always owned his plot and shack.
@@lw1343 Back in "old days" the government didn't pave (or at least level) roads going out to the penniless guy's plot or subsidize the electric and telecom companies running wires out to it.
This is very important work, thank you for shedding light on this issue.
Ive been saying it for years. Paying rent on land you own never made any sense. You might as well just sign a contract with the city saying you will live there as long as you pay them.
Yep. Taxes are straight up theft and bullying.
Yes.
It goes against what the founding fathers envisioned.
10 bucks says these guys are going to get everyone's taxes raised.
@@secretsquirrel6718 The founding fathers literally wrote down in Article 1, Section 8, Clause 1 of the constitution:
"The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States"
Also in the 10th amendment to the constitution:
"The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."
That means not only does the federal government have the right to collect taxes, but so do the state and local governments. This was all written by the founding fathers themselves. George Washington was still serving his first term as president when the 10th amendment was ratified.
Yes, there should be no property taxes and everyone should just pay for the services they use, right? You put your kid in school, you pay an extra $15k/year in taxes. Have a second kid, that's $30k. Have a fire? You get a bill for $10k for having the firefighters put it out. You would have to pay an admission fee to the parks, libraries, playgrounds. Someone breaks into your house, that will be $500 for the police to come out and investigate.
Sounds like a Libertarian dreamworld.
I think you could step even further back from this and argue that the whole idea of a property value tax is inherently regressive. The wealthier a person gets, the less of that wealth is tied up in their home(s). For most people in middle and down, your home is 80 or 90%+ of their total wealth. For the richest people their home is only one asset amongst many and represents a smaller proportion of total wealth the richer they are. This means that a property tax system will always be regressive even when accurately administered correctly because it includes more of your total money in the calculation the poorer you are.
Also as an aside: we know the US has massive education funding gaps between communities because of the property tax system. If such massive gaps occur even though rich communities underpay, imagine how bad it would be if assessments were accurate.
Poor people don't own property, they rent.
Scrap Property tax and do land value tax, more land higher taxes keep it simple.
I don’t know how it works in other states, but in PA, the funding gap is a myth. Disparities is local tax collection are offset by state and federal sources. For example, in Harrisburg, PA, a lower income school district, the 2022-23 school year budget reflects 60 million from local property tax, 100 million from the state, and 60 million from the federal government. Camp Hill, PA school district, a wealthier, but smaller community, received 20 million from local sources, 5 million from state sources, and 767,000 from federal sources(this was the 21-22 budget). So 73% of Harrisburg’s budget was from state and federal sources while only about 23% of Camp Hill’s was. School funding per student does vary from district to district, but the divide seems to be much more urban-rural which probably reflects lower cost of living(with urban and suburban school districts having higher funding, and rural school districts having lower funding).
I did some more research, and PA does rank as one of the worst states in terms of reliance on local funding, so most other states are better. Some people claim that many of PA’s schools are underfunded, but this is supported by the belief that school districts with higher poverty rates need a greater amount of funding per student than other schools. While this may be true, it doesn’t show a funding gap, it shows that poverty is expensive. Other sources claim that Pennsylvanias schools are some of the best funded in the nation, saying that PA ranks 8th in the nation for per student funding.
@@negativenein3803 That might lessen the problem, but it doesn't eliminate it. The basic problem is that property of just about any kind is difficult to put an accurate value on. Is my lot, part of which floods seasonally, worth less than the lot next door that doesn't flood? If so, how much less? How often would it have to flood to reduce value, and by how much? Accurate assessment is one of the fundamental problems with every type of wealth tax.
I'm opposed to wealth taxes (property tax is just a type of wealth tax) of every type because they are fundamentally bad for the economy. If you have to worry about someone, including the government, taking property you fully paid for, it discourages investment. It's even worse when you need that property on which to live. As highlighted in the video, when income does not keep up with property values, people with the fewest options can lose the homes they've lived in for decades.
Tax income, sales, fuel, hotel rooms, alcohol, and imports/exports all you want; no one needs those to live. But taxing property/wealth is a bad idea and impossible to do fairly.
There are 2 problems that keep this disparity going, that are unintentional and more difficult to correct - even if you have a county that wants to make the system more fair:
1) Higher end homes are often CUSTOM, and therefore are unlikely to have a similar recent home sale to use as a comparable market price. Lower end homes, on the other hand, are often built from the same plan as one down the road, that sold recently. Hence, the lower end homes are updated to 'market' far more often. With home prices constantly rising over decades (save the 2008-2010 crisis), that means a lower end home assessment will climb faster.
2) Assessments aren't intended to monitor RESALE CONDITION, unless the condition is so extreme that it affects structure or functionality. Those high-end homes will have high-end makeovers, while the lower end may suffer from deferred maintenance. It will affect the value that each would get from a sale, but the assessor isn't even going to see the inside, and will treat both as if they are simply normal examples of homes in the neighborhood.
Suburban homes aren't unique at all. The exact opposite. The company that built that suburb only used five different models of houses. Old houses in high end neighborhoods is where they have problems
This seems to be the real challenge, not *racism
Thank you Strong Towns for the awareness you have spread ❤❤❤
Great work! Good interviews.
Government doesn’t have a revenue problem, it has a spending problem, which will never go away as long as the argument is always ‘how can we collect more money from x’.
I don't remember seeing that argument in the video. I remember seeing "how can we ensure the government is collecting money in a fair way?"
What specific programs would you recommend the government cut budgets for, how much do those programs cost and how much would you cut?
@@beccangavinThe military
we need to use a land based tax system. the individual per house system doesn't make any sense.
Nah we just need to get rid of most of property taxes and people need to pay to send their kids to school. That's half of my taxes right there. Most of it is just theft beyond schools. I don't receive services outside of using roads. Ypu get nothing for your money
No, we should not have any kind of property taxes. Taxes should only be assessed when there is a transfer of wealth. Once something is in your possession it should not be taxed again.
These exclusive suburban neighborhoods use more resources and they should pay more. In Colorado, they move into the farm lands drive, clog up rural roads and pay lower taxes. They use the most water and drive up food prices by using all the farm land for exclusive use. They use the local schools and pay less.
Rental property is taxed at 30% more than owner occupied, additionally there is a homeowner exemption of a certain amount or percentage.
Those with the least ability to afford paying more taxes (residential renters) are paying the higher taxes imposed upon the owner, who is renting the property.
The other issue is that often lower cost housing rises at a rate with in the parameters set by the legislature... ie some states do not allow assessments to increase by more than X percent per year regardless of actual increase in value.
IF the most you can increase year over year is 15% and the value goes up 20% per year within 5 years you are 25% undervalued on the assessment.
I'm a little disappointed you didn't mention land value tax as a potential option to reduce this discrepancy.
Wow, it's rare at this point for Strong Towns to teach me something they haven't already taught me. Super interesting!
"The power to tax is the power to destroy." - Oliver Wendell Holmes, SCOTUS Justice
Property tax assessment is the preferred method of collecting local taxes because it's relatively easy to assess and collect, and if owners don't pay, the municipality can seize the property. However, there are inequities from top to bottom. Despite generally receiving the same services, the owners of more valuable homes pay more, the owners of less valuable homes pay less. And this is not related to wealth. I knew a wealthy financial planner who purposely chose to live in a small home to avoid paying taxes on a more expensive one, while older people on pensions who live in large homes that have appreciated in value more quickly than the average in their city struggle to pay the increases. And as others have pointed out, capping increases penalizes younger people trying to buy their first home. Honesty and transparency are the only way to make this system work.
My province has a cap system, which limits the increase per year. It means my neighbor pays $2500/year less in taxes. Our homes are identical. It was estimated the 70% of homeowners are overpaying for property tax. It greatly benefits homes of higher values and homes that were purchased decades ago. It's kept in place under the illusion/lie that seniors will lose their home because their taxes will go up
Is the increase limited to inflation? Taxable value cannot go up higher than inflation here in MI. As long as you don't sell the house that is.
during this video i also realized that these taxes incentives the investment in luxury housing, as such the injustice compounds even more.
Great video! This is such a big issue and there is so little discussion on this.
2% on 200k=4k same schools, same police, and same city amenities
1.8% on 1000k=18k
Super regressive!!!
This seems super reasonable, not the extreme paragon of injustice that they are portraying it to be.
Everybody should just pay for what they use!!
@@williamkneen1949 not at all
Great idea floating around is taxing land instead of the supposed value of any given property. It is completely objective (vs. a home's value is mostly subjective), and doesn't punish folks who improve their property with additions, ADUs, etc.
Georgism ?
That'd likely screw over smaller municipalities with downtowns, where property taxes from these areas can make up a substantial % of all tax income
That would greatly punish people with a decent plot of land and a humble house while benefitting people living in mansions on similar plot of land. Sounds like the property tax equivalent of a flat tax which is also super regressive (favors rich people). Also wouldn't work at all at the extremes: taxing farmers to the extreme while basically letting condos pay no property taxes. Along that same line of reasoning: it completely misses that a plot of land in downtown has a lot of value while the same size plot of land in the middle of nowhere does not. So an inner-city mansion would have a tiny fraction the property taxes of middle class suburban homes.
Raising property taxes on people who add more value to their property is like raising income taxes on people who make more money--not punishment, completely reasonable.
@@tHebUm18 it is not the same as raising taxes on people with higher income.
If you have more income, you have more money with which to pay. If the local housing market fluctuates upwards and your home value skyrockets, you owe more but have no additional money to pay with, eventually forcing you to sell your property or lose it.
And who buys it up when you cant afford it? The rich.
Taxing the "value" of the building is just one more way that the poor are forced by the government to cough up wealth without any say in the matter.
@@klosnj11 Except the original commenter's argument wasn't around the content of the video where it goes up based on the housing market being crazy. He specifically mentioned additions/ADUs. If you have $40,000 to invest in a meaningful addition to your home or a 2nd place for people to live on the property (often to rent and make money), it is absolutely reasonable for your property taxes to increase.
I'm sure if Strong Towns weighed in, they would say this is a terrible idea as well--because, again, it's literally the property tax equivalent of a flat tax which is super regressive. It would be infinitely worst for poor people than the current system in the same way a flat tax would be. Their example had a 10% disconnect between average and poor properties--under only looking at the size of the plot of land, it'd probably be 50%+ because a normal house to opulent mansion the land needed scales linearly, not exponentially. The value of having the best lot placement on a river/lake/mountain, a pool, the finest everything money can buy, solar on on the roof so you don't pay a dime for electricity, etc., etc. You could get all that on a plot of land less than 4 times a $80k a house in a poor area and then they'd only pay 4x the property taxes on a home worth more than 20x the value. That proposal would even more lopsidedly benefit rich people--plain and simple.
We need to just get rid of property taxes. I think they do more harm than good. A municipality income tax would probably do much better, especially for those on fixed incomes. Like there's basically no way to plan for your retirement if one day your house could be worth double or triple what it originally was and not your taxes go up by that same amount. Also, doing any renovations or upgrades to your home now means you owe the govt more money? Sounds like a scam
If it looks like a scam, and it sounds like a scam…
YES, yes, yes. This is what I've been thinking from day 1 I came to this country.
There's a law in MI that says taxable value can't go up faster than inflation. That helps seniors.
@@dannydaw59 It's a bandaid to a gaping wound. Fixed Income is exactly that, fixed, so inflation like what we saw in '21-'22 could still cause them to be unable to afford a house they paid off years ago under that law. Property taxes are just a very outdated concept.
@oye123321 ss is tied to the consumer price index so ss benefits will keep up with inflation. If the dude in the video gets ss then he got a boost to his check.
Why is it so hard for rich people to pay their bills? Why do they gotta put the bill on the poor? Its just sad. Also it only works in the old old U S of A where money makes laws and regulations
Locally, our property tax is based, on square footage under roof, and the number of ridges and valleys. A simple ranch with a single ridge line, pays a lower rate than a house with three ridges, and four valleys, which pays more per square foot. The land value is the only disparity, because if you have five acres, and a cow, your land can be taxed as agricultural land, where a 4.9 acre parcel with horses pays as residential.
That's crazy but also scary as tax laws can change and you may find yourself.on the losing end
Glad that the numbers say that Chicago are improving after the previous scandals regarding this issue. When I lived there several years back it was a long running practice for the most powerful political power brokers and their families to get into specialty tax assessment appeal law firms.
I worked in property taxes in Texas for 14 years, the problem is that wealthy people will hire agents to argue their property value for them. Much like the video shows we were supposed to appraise the property at 100% of value. The property tax agents are under no obligation to even acknowledge what market value would be. In addition the state legislature has given the agents the ability to make the appraisal districts, many of which are rural offices that have limited resources, jump through hoops, wasting a large amount of time and resources that the office does not have. If a regular person that only owns their home hires one of these agents they are usually one of the first clients that gets dropped in order to have more leverage to work something out for their wealthy clients.
The system is unfair if you choose to stay in your home, if you choose to SELL, you can get higher profits. THAT'S the problem with the system. It should be based on square footage and condition of home. If I haven't updated my kitchen and bathroom in 20 years I shouldn't be taxed as if I had.
A riveting video on property tax assessors. Only ST could do it!😊
I live in California where property values are set initially to 1.2% of the sales price, and then increases are limited to no more than 1%/year if values are going up. The whole system was the result of 1978 prop 13, which was a tax revolt against owners being taxed out of their homes. It’s not perfect but the result of elected officials who weren’t willing to fix the overtax problems at the time, leaving a gap for angry taxpayers to push through a ballot measure that was more extreme. I talked to some people from Oregon about what their property taxes were like and got confusing answers. One attorney friend said he couldn’t explain it, and he also has a CPA. One said people intentionally allow their properties to look run down to avoid new tax assessments. Prop 13 might not be perfect, but maybe it could be a starting point, as it removes subjective valuations from the assessment process?
Just to provide a flipside to this coin, Prop 13 is driving the insane shortage of housing and cost increases. The only way municipalities can increase revenue under Prop 13 is if sale prices of new home go up year over year. So each year the new homes built and/or sold carry the tax burden for those sold 10-20 years prior, and officials recklessly do anything to push up home values, a result of perverse incentives.
Prop 13 is why y’all have the most expensive housing market in the country (maybe even the world). Rent control for property owners is the most regressive nonsense I’ve ever heard of.
As others have stated Prop 13 can contribute to cities to trying to keep property values high to maintain city income.
With a constrained housing supply this means the tax burden is transferred to new buyers which is typically future generations or people new to the area.
This leads to a significant tax difference between properties in the same neighborhood or even next door to each other. In high priced areas like SF Bay Area and LA Metro you can easily find homes that are worth $1.5MM+ paying taxes on an assessed value of something like $200,000-$400,000; where the house next door that has sold recently will be paying property taxes on $1.5MM.
Couple this with other city and state wide caps on things like parking pass prices, bond measures and other tax increases, you end up with a lot of broke cities with underfunded infrastructure and public works projects.
Prop 13 needs to go.
Prop 13 also applies to commercial properties which is ridiculous.
I've just seen a video in 1Dime channel debunking that taxes have nothing to do with services fundamentally. good to have this insight in the topic to help you more with your message.
My husband and I bought a fixer upper in a rural area of Indiana. Due to increases in property taxes our mortgage went from 745 to 900. Kinda hurt when we're in the process of renovations and just everyday cost of living that has when up to what feels like a lot!
Land Value Tax needed