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Thread: Spin-off question about property taxes

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    Cyburbian stroskey's avatar
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    Spin-off question about property taxes

    This is from the Camden, NJ discussion.

    Instead of collecting property taxes on a subjective number like value why don't counties base taxes on the total square footage of a property. I know it would hit poorer households with a larger percentage in taxes but in my mind it at least seems the least arbitrary way. The size can't change based on who is doing the evaluation like assessments can. Is this even possible to do if a county wanted to try it?

    You could still say commercial or industrial properties were 1.5 or 2 times the price of residential but this way would take the guesswork out of the system. We get people who build additions and they say "Great, now you can raise my taxes."

    Let's think about this for a minute: other than maybe a tiny bit of increased fire protection, why does someone building an extra room have anything to do with how much they should pay in taxes? They aren't creating a stronger demand on city services so why punish them for it?

    Thoughts?

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    Corn Burning Fool giff57's avatar
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    Area is part of the complicated Iowa formula, they just use it to calculate the assessed value of the property. If you want to get a headache, go talk with your county assessor about how the formula works.
    “As soon as public service ceases to be the chief business of the citizens, and they would rather serve with their money than with their persons, the State is not far from its fall”
    Jean-Jacques Rousseau

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    Cyburbian stroskey's avatar
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    Quote Originally posted by giff57 View post
    Area is part of the complicated Iowa formula, they just use it to calculate the assessed value of the property. If you want to get a headache, go talk with your county assessor about how the formula works.
    Exactly - it's a headache. Is it even possible to set it strictly on lot size?

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    Cyburbian Random Traffic Guy's avatar
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    Quote Originally posted by stroskey View post
    This is from the Camden, NJ discussion.
    Instead of collecting property taxes on a subjective number like value why don't counties base taxes on the total square footage of a property. I know it would hit poorer households with a larger percentage in taxes but in my mind it at least seems the least arbitrary way. The size can't change based on who is doing the evaluation like assessments can. Is this even possible to do if a county wanted to try it?
    this would be great, but impossible since the ever-expanding budgets would have to be sustained by real tax rate increases, which are politically difficult. The appraisal system allows stealth tax increases every year by valuation increase, giving politicians a way to say "I keps taxes the same (rate) and still got us all this new stuff. Yay me!".

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    Cyburbian CJC's avatar
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    Quote Originally posted by stroskey View post
    Let's think about this for a minute: other than maybe a tiny bit of increased fire protection, why does someone building an extra room have anything to do with how much they should pay in taxes? They aren't creating a stronger demand on city services so why punish them for it?

    Thoughts?
    This is fine if you're only looking to use property taxes as a way to fund services. However, property taxes have been shown to be an incredibly efficient way to encourage a property to be used at its highest use. In an area that is shedding population, this doesn't work as well, but it works great in stable and growing areas.
    Two wrongs don't necessarily make a right, but three lefts do.

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    Corn Burning Fool giff57's avatar
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    Quote Originally posted by stroskey View post
    Exactly - it's a headache. Is it even possible to set it strictly on lot size?
    Not in Iowa, without a change in the law. There has been a study committee down in Des Moines working on property tax reform. They have done nothing in the few years they are working on it. The State sets the formula that the assessors must use. Getting the State Legislature to do anything with a property tax system they do not understand is not possible.

    The system needs to be thrown out and a new one established, but until such change can be assured to lower everyone's taxes, it will never happen.

    I don't know if other states have simpler systems like the ones you describe, but I doubt it. The value of property depends upon too many variables for such a system to work. I know if I have a crappy, falling down house, I should not have to pay the same as a new house of the same size on an equal sized lot.

    Personally I think they should do away with property and income taxes and fund everything on a sales tax with no exemptions and no loop-holes.
    “As soon as public service ceases to be the chief business of the citizens, and they would rather serve with their money than with their persons, the State is not far from its fall”
    Jean-Jacques Rousseau

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    Cyburbian stroskey's avatar
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    Quote Originally posted by giff57 View post
    I know if I have a crappy, falling down house, I should not have to pay the same as a new house of the same size on an equal sized lot.
    Why shouldn't you have to pay the same if you both take up the same land area in the same city? How does the nicer house on the same sized lot require more services that would warrant a higher tax bill?

    And I agree with you about a straight sales tax with no loopholes. Politicians say they want an easy tax code yet the refuse to make one.

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    Cyburbian Brocktoon's avatar
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    Arizona does this as an economic development incentive since we cannot do tax abatement's. Its the craziest program I have ever encountered where the real property is owned by the local government and assessed an excise tax rate. Its called a GPLET. The excise tax amount is based on usage and location and duration of the lease. It can reduce the tax burden by 80% or so but is an overly complex structure to create and many city and town councils are not wild about owning an industrial or commercial property and leasing it back to the end user.
    "If you don't like change, you're going to like irrelevance even less" General Eric Shinseki

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    Cyburbian The One's avatar
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    Hmmm.....

    Quote Originally posted by Brocktoon View post
    Arizona does this as an economic development incentive since we cannot do tax abatement's. Its the craziest program I have ever encountered where the real property is owned by the local government and assessed an excise tax rate. Its called a GPLET. The excise tax amount is based on usage and location and duration of the lease. It can reduce the tax burden by 80% or so but is an overly complex structure to create and many city and town councils are not wild about owning an industrial or commercial property and leasing it back to the end user.
    L I A B I L I T Y

    I haven't as yet had the pleasure of seeing this in action in Arizona.....but I would think this could be an issue
    "The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness."
    John Kenneth Galbraith

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    Cyburbian Rygor's avatar
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    Doing that would pretty much kill the idea and effectiveness of TIF Districts, unless someone could come up with an equally effective economic development tool based on the new appraisal system. I'm not sure how that would work, though. I suppose you could do assessment freezes as an ED tool but it would have limited benefit as it would apply only to the expanding property.
    "When life gives you lemons, just say 'No thanks'." - Henry Rollins

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    Cyburbian transguy's avatar
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    Quote Originally posted by stroskey View post
    Why shouldn't you have to pay the same if you both take up the same land area in the same city? How does the nicer house on the same sized lot require more services that would warrant a higher tax bill?

    And I agree with you about a straight sales tax with no loopholes. Politicians say they want an easy tax code yet the refuse to make one.
    It would be regressive and you would be increasing the burden on the poor. If you don't increase the burden on the poor, it means that you've decreased the amount paid by the rich. Then how do you fund the same services with a decrease in revenue?
    Much work remains to be done before we can announce our total failure to make any progress.

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    Is 'fair-share' a proper concern of tax policy?

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    Cyburbian Brocktoon's avatar
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    Quote Originally posted by giff57 View post
    Personally I think they should do away with property and income taxes and fund everything on a sales tax with no exemptions and no loop-holes.
    Sales tax is the most volatile of the major taxes that states collect and it is the most regressive. The city I work for total sales tax is 8.7% (5.6% state, 1.1% county and 2% city) and the state is talknig about increasing it the state portion another 1% which would make my town's sales tax rate just under 10%. Granted their are a lot of loopholes but sales of all types of consumables are down across the board.

    AZ is a big sales tax states and has a 30% whole in its annual budget which is the largest budget deficit in the country, although is closing in which is another sales tax heavy state. Plus you have the Internet which will continue to be a hole in the tax code.
    "If you don't like change, you're going to like irrelevance even less" General Eric Shinseki

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    Cyburbian CJC's avatar
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    Stroskey,

    I've always liked Henry George's idea of a land value tax to replace all other taxes (at least at the state level and below):

    http://en.wikipedia.org/wiki/Land_value_tax

    It's essentially a property tax that taxes only the value of the land and ignores improvements on the land, which sounds similar to what you're advocating. The main reason that people wouldn't like it would be that as the land around them becomes more desirable (for whatever reason) their taxes would rise, even if they didn't improve their property at all (the primary intent of the tax [aside from generating revenue to fund services] is to provide an incentive for land to be used for its highest use). There is a lot of room for abuse and manipulation, which is a concern.
    Two wrongs don't necessarily make a right, but three lefts do.

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