planoaggie123 said:
hph6203 said:
If you fix it to the purchase price the taxing authority only has the option to raise tax rates to increase revenues. If you're not raising values to meet the market that incentivizes people to not move from one house to another, which suppresses inventory on the market, which can cause increasing home purchase prices until the system collapses.
Not saying it would absolutely happen that way, but that's the issue I see. Adjusting the value is a better system than adjusting the rates, because adjusting the value is less ham fisted.
Really not sure that property taxes as your main source of revenue is better than an income tax. Certainly living in a property tax state while earning and then an income tax state while retiring is probably best.
So without our government applying a "value" to our homes you think the market would not properly adjust? I kinda get that in the past but now we have so much readily available data to determine reasonably accurate FV without government 10% increases.
Ultimately the government is going to overspend and figure out ways to take it from us anyways. Just like to get annoyed for a few days then move along with life...
No, unless I'm misunderstanding you, you're saying set a fixed valuation on a property based upon the value at the time of purchase. Which means no tax increases unless a tax rate increase is imposed. If there's no tax rate increase, then an individuals taxes stay stagnant while property values increase due to inflation or market pressures. If they live in a house for 7 years you're talking about a person absorbing a ~15% tax hike for a similarly valued house (assuming only a 2% valuation rise annually), let alone an upgrade on their house. So imagine you have the option to live in a house with a fixed property tax rate, or you increase your taxes by 50% to upgrade. People will still choose to move, but it would certainly happen less often.
Let's say you buy a house for $100,000 and live there for 7 years. No tax rate increases and the house appreciates at 2% per year (pretty stale in any market, let alone the current real estate market), with a 2.5% tax rate on that value, or $2,500 total property taxes.
You're now at a market value of $115,000 and contemplating buying an upgraded house because your income has gone up and you've got a couple of rugrats getting to the age where they need their own room, so you're looking to buy a house 30% more than your current homes value, or 150,000 (115,000x1.3). Now you're choosing between taking a voluntary tax hike of 50% (100,000 purchase price to a new tax valuation of 150,000 on the new home) or sticking it out in your current home and making it work.
Gets even worse if you assume an up market of 5% per year. 140,000 new value, 30% upgrade to 182,000. You're looking at a voluntary 82% tax increase when switching homes.
I'm not saying it can't work, but it takes the decision making process out of the hands of the market at large and places it squarely on the local government to correctly set tax rates. Yes they create the assessment value, but that value is supposed to be reasonable in comparison to market values.