Morning Read: Grieving over your property taxes
Property taxes are a huge flashpoint in the North Country, not least among second homeowners who complain of feeling like an ATM for local governments.
Their waterfront property and upscale homes often assess for big bucks and their property tax payments now account for the lions share of taxes paid in several of the region’s counties.
Still, grieving those high assessments is a hassle, so a lot of people don’t bother. But the New York Times is reporting that there’s a boom in commercial grievances-for-hire.
Their story focuses on Westchester county, where “a growing industry of companies [is] seeking reductions in homeowners’ bills in exchange for a share of their savings.”
Towns are being forced to refund millions of dollars to homeowners who show they have been overcharged. Some, like New Rochelle, have been forced to increase tax rates to make up for the erosion of assessed property values.
So what do you think? Is this something that could catch on here? Is this a case of lawyer sharks finding a new pool to swim in?
Or does this level the playing field between local governments and the people they tax?
Tags: politics
To paraphrase my post on the previous “raise taxing” thread.
There is a point in raising taxes, where the market will simply take place in a way that it cannot be measured.
The economy will go “to the streets”, and tax receipts to the government will decrease, even though rates are increasing. This will create an even greater rate increase, which will drive more of the market action into the “streets”.
The only way for the government to increase tax receipts is to do what every business knows. Have a sale. (i.e. lower tax rate).
More businesses will develop. More “good citizens” will participate in the system, and tax receipts to the government will go up.
That is the goal, isn’t it?
I grieved my assessment one year. You dont need a lawyer, but its not very satisfying. I’ll leave it there.
Please JDM, not the (aptly named) Laffer Curve. Since it first appeared on a cocktail napkin in front of an eager Dick Cheney, that notion has been debunked again and again. It works, as you suggest, but only on paper and only if you are able to hit the “sweet spot.” Theorists have guessed that spot at anywhere from 20-80 percent, depending upon the complexities of any specific modern economy at any single moment. And if (inevitably when) you move beyond that moment, the sweet spot disappears, revenues plunge, and deficits soar. Sound like the mess we have right now?
Yes, revenues have increased after tax cuts. They have also fallen, dramatically (and disasterously). Just ask the Irish how Laffer has worked out for them. Goodness, even Laffer has distanced himself from the notion that the theory works in the real world of complex, volatile, global economics.
There are two points of confusion I’ve encountered over the years in discussing grievances locally. The assessors are sometimes confused and think they are responsible for ensuring enough taxes for a school. They are simply responsible for equably assessing property. It is the job of the school/town/county to set the tax rates.
The second issue I’ve seen is that many people simply want to claim their assessments are high, without understanding how they are assessed. They don’t want to research the process of how the assessment was arrived at, and they haven’t even considered what recent selling prices or their neighbors taxes are. These people might benefit from counsel in grievance process.
Nonetheless, the state equalization rates for small towns up here are often based on town samples that are too small to be statistically valid, and collectively I think the towns should fight this.
Linda – here you can go to the assessors and show them the recent sales of your neighbors houses to “prove” that you are over assessed 30% or so. that means your neighbor is paying 30% less property tax than you simply because they bought their house recently. The assessors pull up sales in other neighborhoods of other houses that are sort of similar to yours. Maybe they reduce your assessment a little.
and JDM -yes enough with the Laffer curve – it belongs with the tooth fairy and santa claus
“and JDM -yes enough with the Laffer curve – it belongs with the tooth fairy and santa claus”
…and history class. Works everytime it was tried.
When was the last time you heard someone complain their taxes, any of their taxes, were too low?
Anyway, when it comes to those who go to a grievance board and get their assessment lowered, I think there should be a new item added to the tax code.
This new item would require anyone who wins a lower assessment and then sells the property at a higher than assessed rate within two years to make up the difference and pay the tax they would have been paying if they hadn’t won a lower assessment.
It really burns assessors when they see this happen and it happens every year in just about every town and county.
“If there’s one thing that economists agree on, it’s that these claims are false. We’re not talking just ivory-tower lefties. Virtually every economics Ph.D. who has worked in a prominent role in the Bush Administration acknowledges that the tax cuts enacted during the past six years have not paid for themselves–and were never intended to.”
http://www.time.com/time/magazine/article/0,9171,1692027,00.html#ixzz1M3HKmGq6
Good, short read
“…and history class. Works everytime it was tried.”
That’s right. And, the US auto company bailout was a complete failure. Entitled to your own opinion but not your own facts.
JDM, as to history, that Time piece has this: “The idea that high tax rates brought diminishing returns was not controversial or even new–Laffer traces it to 14th century Muslim philosopher Ibn Khaldun.”
Espousing a theory introduced by someone named Ibn Khaldun could get you thrown out of the lodge.
If you review property sales on the waterfront, the phrase “irrational exuberance” comes to mind.
The funniest story I heard recently regarding assessments is about a fellow who purchased 40+ acres for around $45,000. Prior to the sale, the property had been assessed at +/- $12,000. The new owner is puzzled by the fact that his assessment jumped to $45,000. “It’s not worth that!”
“What did you pay for it?”
Extremely high taxes obviously hurt economic growth.
I do think the property tax situation up here has slowed growth and I think it is extreme particularly when compared to the rest of the country. Does it make sense to pay $8,000 per year in taxes for a 200K house? Why would you build a new home? That amount of $667. Per month just in taxes is for perpetuity, unlike a mortgage it never will go away and will never go down and if history is a guide always increase.
So given that amount just to pay taxes one would ; if given choices, choose to build or buy or live somewhere else. This is large enough that it would impact behavior.
Higher taxes = higher revenue. Nuff said.
In truth, not all assessors are completely impartial or knowledgable and this has led to problems.
Maybe it is time to eliminate the property tax and switch to an income tax as a replacement?
If you eliminated the property tax and replaced it with an income tax, what would the effect be on the availability of property to purchase?
Far more important than a 2% cap on property taxes would be a 2% cap on the prices of gas, heating oil, electricity and food.
Any politician brave enough to come out for that?
I am against the insanity of our high property taxes. BUT a cap in my opinion is not constitutional. A community should have the right to determine if it wants to pay more or not to support its school and village.
Solution is not that comlicated says:
May 11, 2011 at 12:46 pm
“Higher taxes = higher revenue. Nuff said.”
Lower spending effectively equals higher revenue too.
Nuff said is right though, higher taxes, at least property taxes do equal higher revenue. They are a great way of extracting revenue from the people which is why they are so powerful. People can’t easily move so the property tax is very price inelastic. People can’t just move and sell their homes when the property tax goes up, they just have to suck it up and pay. What other tax has the power to take away your home within one year? It is a very heavy handed use of government power.