# Property tax question **URL:** \ **Category:** Factual Questions\ **Created:** [September 25, 2019, 4:05am UTC](https://boards.straightdope.com/t/property-tax-question/840789 "2019-09-25T04:05:32Z")\ **Posts on this page:** 18\ **Page:** 2
**Author:** ![elfkin477](https://avatars.discourse-cdn.com/v4/letter/e/a9a28c/32.png) [@elfkin477](https://boards.straightdope.com/u/elfkin477)\ **Post date:** [September 25, 2019, 7:51pm UTC](https://boards.straightdope.com/t/property-tax-question/840789/21 "2019-09-25T19:51:33Z")
> [@Jasmine](#): > > It’s pretty much arbitrary based on a community’s needs and what it wants to fund. In an urban area like Chicago, upscale suburbs have very high property taxes because they heavily fund education and other community services. Yes, this. The[nationwide average property tax is 1.12%](https://smartasset.com/taxes/property-taxes#us/school). Where I live it’s 2.4% We don’t have a sales tax, and we don’t have an income tax, so we need to pay for services _some_ way and that way is primarily via property taxes. ---
**Author:** ![bubba001](https://avatars.discourse-cdn.com/v4/letter/b/f17d59/32.png) [@bubba001](https://boards.straightdope.com/u/bubba001)\ **Post date:** [September 25, 2019, 10:50pm UTC](https://boards.straightdope.com/t/property-tax-question/840789/22 "2019-09-25T22:50:47Z")
> [@Corry\_El](#): > > Interesting. Really hard to generalize about how state/local govt stuff in the US works, it again shows. As. Michigan resident, I thought that under proposal A, in 94, that the school districts got the same X dollars per student. If a local school districts want to tax themselves higher, they are allowed to do so. Last number I remember was about $6k per student. Only a few districts, wealthy ones, add on their own money. We do have a pop up issue here also. I’ve lived in my home for over 30 years. My property taxes are limited t the rate of inflation or less. So if I sold, the new buyer would be looking at much higher taxes. It could be a big number. Real estate folks will tell you that the taxes the old owner pays has no relation to what the new buyer will pay. Assessments are all over the place. ---
**Author:** ![bubba001](https://avatars.discourse-cdn.com/v4/letter/b/f17d59/32.png) [@bubba001](https://boards.straightdope.com/u/bubba001)\ **Post date:** [September 25, 2019, 10:55pm UTC](https://boards.straightdope.com/t/property-tax-question/840789/23 "2019-09-25T22:55:30Z")
> [@Corry\_El](#): > > Interesting. Really hard to generalize about how state/local govt stuff in the US works, it again shows. The reason Michigan moved to a statewide funding was that the small outstate school districts, primarily Republican areas, were going broke. The republican governor, John Engler was from outstate. The districts could not get millages passed, few students, and a lot of retirees made that difficult. ---
**Author:** ![yabob](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/yabob/32/2821_2.png) [@yabob](https://boards.straightdope.com/u/yabob)\ **Post date:** [September 25, 2019, 11:42pm UTC](https://boards.straightdope.com/t/property-tax-question/840789/24 "2019-09-25T23:42:49Z")
> [@DrDeth](#): > > Yes, overall tax burden. > CA for example, has high income tax but low prop tax- altho with it’s high sales taxes it is still up there. NY, Conn & NJ are the 3 highest. > [https://247wallst.com/special-report/2019/02/27/states-where-americans-are-paying-the-most-taxes-3/11/](https://247wallst.com/special-report/2019/02/27/states-where-americans-are-paying-the-most-taxes-3/11/) Low property tax in CA is influenced by Prop 13. Passed in 1978. This limits property tax to 1 percent of value at time of sale, and allows the tax to rise by no more than 2 percent per year until the next sale, when the starting value is reset. The sort of thing somebody was talking about above, where somebody who has had their house for a long time is paying far less property tax than somebody who has just purchased a comparable house. A new homeowner is far less likely to think CA property taxes are low than somebody who has had their house for 20 years and is paying 1.5 times their original property tax while the home’s value has increased by a far larger factor. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [September 26, 2019, 3:56am UTC](https://boards.straightdope.com/t/property-tax-question/840789/25 "2019-09-26T03:56:40Z")
> [@yabob](#): > > Low property tax in CA is influenced by Prop 13. Passed in 1978. This limits property tax to 1 percent of value at time of sale, and allows the tax to rise by no more than 2 percent per year until the next sale, when the starting value is reset. The sort of thing somebody was talking about above, where somebody who has had their house for a long time is paying far less property tax than somebody who has just purchased a comparable house. A new homeowner is far less likely to think CA property taxes are low than somebody who has had their house for 20 years and is paying 1.5 times their original property tax while the home’s value has increased by a far larger factor. A new homeowner is very happy to see only 1%. And yes, because why are you taxed on the value, since the value fluctuates wildly in the California real estate market? You are taxed on what you paid for it. This is far more fair. It also stops the elderly from being forced out of their homes by crazy high tax bills. ---
**Author:** ![DinoR](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dinor/32/2821_2.png) [@DinoR](https://boards.straightdope.com/u/DinoR)\ **Post date:** [September 26, 2019, 6:02am UTC](https://boards.straightdope.com/t/property-tax-question/840789/26 "2019-09-26T06:02:58Z")
> [@bubba001](#): > > As. Michigan resident, I thought that under proposal A, in 94, that the school districts got the same X dollars per student. The initial rates were based on pre Prop A funding levels in the districts. Districts getting less then got double IIRC sized raises as the state raised funding. So it wasn’t an equal amount to start but was set up to trend that way over the years. I’ve been gone a touch over a decade. They might have finally equalized since I left Michigan ---
**Author:** ![Omar\_Little](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/omar_little/32/269_2.png) [@Omar\_Little](https://boards.straightdope.com/u/Omar_Little)\ **Post date:** [September 26, 2019, 2:30pm UTC](https://boards.straightdope.com/t/property-tax-question/840789/27 "2019-09-26T14:30:52Z")
> [@Great\_Antibob](#): > > Um…Texas is a big state and this is certainly not true for the whole of it, especially this last decade. > > Appraisals (and property values and corresponding property taxes) have grown very fast in all the metropolitan areas. From the [Dallas Fed](https://www.dallasfed.org/~/media/documents/research/swe/2018/swe1803c.pdf) in 2018: > > While this doesn’t indicate things are unusually worse in Texas than elsewhere, it certainly doesn’t indicate property value stability. Your time set includes the rebound after the financial crisis. Which is an anomaly. I’m talking about over the last 40 years. :rolleyes: ---
**Author:** ![Orwell](https://avatars.discourse-cdn.com/v4/letter/o/dfb087/32.png) [@Orwell](https://boards.straightdope.com/u/Orwell)\ **Post date:** [September 26, 2019, 2:46pm UTC](https://boards.straightdope.com/t/property-tax-question/840789/28 "2019-09-26T14:46:07Z")
> [@DrDeth](#): > > A new homeowner is very happy to see only 1%. > > And yes, because why are you taxed on the value, since the value fluctuates wildly in the California real estate market? You are taxed on what you paid for it. This is far more fair. It also stops the elderly from being forced out of their homes by crazy high tax bills. How can it be fair that two side-by-side identical properties pay wildly different real estate taxes? Seems to be an obvious textbook example of something that’s not fair (or equitable or reasonable or desirable or any other similar words). As for “the elderly”, many states have homestead exemptions and/or special relief for seniors that still maintain more equity between properties than California’s silly system that is tied to how long someone has owned a property. ---
**Author:** ![Great\_Antibob](https://avatars.discourse-cdn.com/v4/letter/g/e47c2d/32.png) [@Great\_Antibob](https://boards.straightdope.com/u/Great_Antibob)\ **Post date:** [September 26, 2019, 2:57pm UTC](https://boards.straightdope.com/t/property-tax-question/840789/29 "2019-09-26T14:57:12Z")
> [@Omar\_Little](#): > > I’m talking about over the last 40 years. Fair enough (and I personally did buy at the low end about 10 years ago), but it still doesn’t track. From A&M (though only going back 30 years), you can see, despite the temporary drop 10 years ago, the overall trend even going back to 1990 does not show a lot of stability in price but rather an increasing trend. I don’t have the corresponding national numbers, but the rate of increase in Texas is certainly faster than inflation and has been for 3 decades now. Note these are sales prices rather than appraised prices, but those are fairly well correlated, at least in all the major urban and suburban centers. > **[Housing Activity - ...](https://www.recenter.tamu.edu/data/housing-activity#!/activity/State/Texas)** > > Real Estate Center at Texas A&M University, helping Texans make better real estate decisions. And this does affect property taxes, as sometimes even with slight reductions in tax rate, as I personally saw last year, overall taxes can still increase due to increased appraised value. And that’s the thing. Percentages are nice but a low percentage on a big number can still be a lot more than a high percentage on a smaller number. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [September 26, 2019, 5:44pm UTC](https://boards.straightdope.com/t/property-tax-question/840789/30 "2019-09-26T17:44:23Z")
> [@Orwell](#): > > How can it be fair that two side-by-side identical properties pay wildly different real estate taxes? Seems to be an obvious textbook example of something that’s not fair (or equitable or reasonable or desirable or any other similar words). > > As for “the elderly”, many states have homestead exemptions and/or special relief for seniors that still maintain more equity between properties than California’s silly system that is tied to how long someone has owned a property. Because people paid different prices for them. Let us say you go to a Black friday sale and pick up a $1000 TV for just $200. Your neighbors buys his a few days earlier and pays $1000 with $100 sales tax. Should you, too, also pay $100 sales tax? Or $20? Those do crap. ---
**Author:** ![Orwell](https://avatars.discourse-cdn.com/v4/letter/o/dfb087/32.png) [@Orwell](https://boards.straightdope.com/u/Orwell)\ **Post date:** [September 26, 2019, 6:14pm UTC](https://boards.straightdope.com/t/property-tax-question/840789/31 "2019-09-26T18:14:13Z")
> [@DrDeth](#): > > Because people paid different prices for them. > > Let us say you go to a Black friday sale and pick up a $1000 TV for just $200. Your neighbors buys his a few days earlier and pays $1000 with $100 sales tax. Should you, too, also pay $100 sales tax? Or $20? > > Those do crap. It isn’t a sales tax. The county/state already collected a sales/recording tax on the purchase. Property taxes are intended to pay for schools, infrastructure, police, fire departments, etc. And they are traditionally/ostensibly based on assessed values (current market values), which are supposed to be uniform. Some states collect personal property taxes on vehicles. Are you suggesting that the hundred thousand owners of 2015 Toyota Camry cars should all pay different taxes based on how good a deal they got at their local dealership? Or that the tax should vary depending on whether they bought the 2015 Camry in 2014, 2015, 2016, 2017 or 2018? If you bought House A at an auction where the seller had 15 days to dispose of the property (at a discount), should you pay less in RE taxes than the owner of identical House B next door? I don’t see how that makes sense. I think you and I are just going to have to agree to disagree on this. RE taxes should be uniform based on value, not dependent on how long someone has owned a property. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [September 26, 2019, 6:31pm UTC](https://boards.straightdope.com/t/property-tax-question/840789/32 "2019-09-26T18:31:56Z")
> [@DrDeth](#): > > Because people paid different prices for them. > > Let us say you go to a Black friday sale and pick up a $1000 TV for just $200. Your neighbors buys his a few days earlier and pays $1000 with $100 sales tax. Should you, too, also pay $100 sales tax? Or $20? > > Those do crap. Indeed. I know the property taxes of three houses on my block, and they are all wildly different, with mine in the middle. But purchase prices were wildly different also. I didn’t do anything that resulted in the wild increase in my house value, that was luck. It is true that rising house values often go with rising income, but income taxes can address that. The real problem in California is property tax on businesses, which has the same cap. Since businesses move or die more rarely than people, businesses pay less than they should. Whether or not that’s justified, it is an example of where California is business-friendly. BTW improvements to a home increase its value for tax purposes. I just put in air conditioning and my assessed value will go up by the cost of the system, which seems fair to me. ---
**Author:** ![Surreal](https://avatars.discourse-cdn.com/v4/letter/s/eada6e/32.png) [@Surreal](https://boards.straightdope.com/u/Surreal)\ **Post date:** [September 26, 2019, 7:03pm UTC](https://boards.straightdope.com/t/property-tax-question/840789/33 "2019-09-26T19:03:56Z")
> [@DrDeth](#): > > CA for example, has high income tax but low prop tax > [@Great\_Antibob](#): > > Texas is in the top 5 (top 3 maybe?) in terms of property taxes in the country. Actually the Tax Foundation ranks California 14th and Texas 37th in the nation in terms of property taxes: > **[Ranking Property Taxes on the 2019 State Business Tax Climate Index](https://taxfoundation.org/data/all/state/ranking-property-taxes-on-the-2019-state-business-tax-climate-index/)** > > State property tax component rankings in our 2019 State Business Tax Climate Index. See how your state compares on property taxes. ---
**Author:** ![Great\_Antibob](https://avatars.discourse-cdn.com/v4/letter/g/e47c2d/32.png) [@Great\_Antibob](https://boards.straightdope.com/u/Great_Antibob)\ **Post date:** [September 26, 2019, 8:08pm UTC](https://boards.straightdope.com/t/property-tax-question/840789/34 "2019-09-26T20:08:58Z")
> [@Surreal](#): > > Actually the Tax Foundation ranks California 14th and Texas 37th in the nation in terms of property taxes: As noted in your cite, these rankings aren’t based on tax rate alone. It’s a composite index ranking how that particular state’s average property tax system (not just the rate or per capita amount of tax) are beneficial to that state’s business climate. Further, the rank is weighted more heavily based on the property tax rate on businesses than on individual homeowners and includes things like tax on personal property, taxes on inheritances and gifts, etc. And while that can be a nice metric, that’s not as relevant for this particular discussion which is focused more on homes. In terms of average tax rate on, say, a single family house, Texas is much higher than 37th among states and California much lower than 14th. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [September 27, 2019, 3:06am UTC](https://boards.straightdope.com/t/property-tax-question/840789/35 "2019-09-27T03:06:44Z")
> [@Voyager](#): > > I… > The real problem in California is property tax on businesses, which has the same cap. Since businesses move or die more rarely than people, businesses pay less than they should. Whether or not that’s justified, it is an example of where California is business-friendly…e. I concur on that point! ---
**Author:** ![Northern\_Piper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/northern_piper/32/5304_2.png) [@Northern\_Piper](https://boards.straightdope.com/u/Northern_Piper)\ **Post date:** [September 27, 2019, 3:56am UTC](https://boards.straightdope.com/t/property-tax-question/840789/36 "2019-09-27T03:56:44Z")
Is it business-friendly, or established-business-friendly? Sounds like entrepreneurial start-ups will be facing a higher tax burden than established businesses? Why does the tax policy favour established businesses over start-ups? ---
**Author:** ![Orwell](https://avatars.discourse-cdn.com/v4/letter/o/dfb087/32.png) [@Orwell](https://boards.straightdope.com/u/Orwell)\ **Post date:** [September 27, 2019, 2:15pm UTC](https://boards.straightdope.com/t/property-tax-question/840789/37 "2019-09-27T14:15:21Z")
I’ve never heard of California being referred to as “business friendly”. In fact, a quick web search reveals that USA Today, [Investors.com](http://Investors.com), Forbes, [inc.com](http://inc.com) and [taxfoundation.org](http://taxfoundation.org) (I gave up looking after this) all rank CA in the bottom half of US states in terms of being business friendly… often at or near the very bottom. I’d say the inclusion of non-residential real estate in Proposition 13 was purely a political maneuver to ensure it would pass. I think it’s a horrible law, and am surprised the Supreme Court allowed it. > [@](#): > > Is it business-friendly, or established-business-friendly? Sounds like entrepreneurial start-ups will be facing a higher tax burden than established businesses? Why does the tax policy favour established businesses over start-ups? In many/most states, the opposite is true. Property and income tax breaks are handed out to attract new businesses. This ends up being a race to see who gives away the most, which angers successful existing businesses who are paying lots of taxes. ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [September 27, 2019, 3:40pm UTC](https://boards.straightdope.com/t/property-tax-question/840789/38 "2019-09-27T15:40:21Z")
> [@Great\_Antibob](#): > > As noted in your cite, these rankings aren’t based on tax rate alone. > > It’s a composite index ranking how that particular state’s average property tax system (not just the rate or per capita amount of tax) are beneficial to that state’s business climate. Further, the rank is weighted more heavily based on the property tax rate on businesses than on individual homeowners and includes things like tax on personal property, taxes on inheritances and gifts, etc. > > And while that can be a nice metric, that’s not as relevant for this particular discussion which is focused more on homes. In terms of average tax rate on, say, a single family house, Texas is much higher than 37th among states and California much lower than 14th. In terms of median taxes to home value Texas is third in the country at 1.81% and California is tied for 32nd in the country at .74%. Alabama is 49th in the country at .33% [Previous page](https://boards.straightdope.com/t/property-tax-question/840789.md?page=1)