By “incumbents,” I mean homeowners who have been homeowners for a while. For example, the hypothetical guy who bought his house in 1955 and who pays very low property taxes.
In general, policies that protect incumbents have the potential to make life worse for newcomers.
I would guess so too.
Actually, there is a way of taxing people that’s less arbitrary- and it’s practiced not so far away, in NYC. My property tax is quite low, compared to those in Long Island and Westchester- about $2000 a year. But we have a local income tax. When my income goes down in retirement , my property tax will remain the same but my total tax burden will drop. In my experience, the nearby suburbs with the high property taxes do not have a local income tax.
I am a senior living in Ilinois, we have a small house in the country. Our taxes are over $2,000.00 a year, Our daughter pays $4,000.00 Taxes. She has a 3 bedroom house. There is what they call an equlization tax, and all the houses around us are like 4 to 6 bedroom house and they are all on over an acre of land. Our house is very old but they say the land value is so much higher…go figure.
We have always lived under our income, as that is the only way to get ahead. Even a millionaire would go broke if he lived over his income, and just living in ones income you will just break even, and if an illiness occurs one can go down fast. We do not spend our money on a lot of things we have always looked forward to our old age so Our children will not have to pay for our care,should we need it one day.
Monavis
It may not be that big of a house. It’s 20 miles outside of Manhattan so a half million dollar home isn’t a McMansion or anything. It’s just a regular-size house.
Folks in the media (and on this board) constantly confuse income and wealth.
The question you should be addressing is whether or not a senior citizen who has limited cash flow should be required to pay property taxes. Limited cash flow is not the same as poor. A monthly income of $620 is only part of the story if an individual has a net worth of $1,000,000, for instance.
The simplest solution for the dilemma presented here, in my opinion, is to pass a law which allows the government to attach a lien for deferred taxes plus interest on a senior’s home payable when the house is sold. If the senior is truly living on $620/month then the house is already (mostly) paid for and there is equity in it. Attaching a lien will guarantee that the taxes are paid when the senior transfers or dies, but not cost the senior any cash flow.
Creating a situation where the senior pays less tax on their home subsidizes the senior’s children at the cost of other taxpayers.
ETA: apologies for rude wording. I should have said, “The question I would address is…”
I agree. The key to doing that is to think about how we tax property so that it’s unusual to end up in this type of situation in the first place. Taxing houses based on the current assessed value (as many places do) is a recipe for making sure this does happen regularly. It’s great for the government-- they get tons of money without having to pass any new taxes. Prop 13, flawed as it is, put an end to that in CA, and I’m surprised we haven’t seen that adopted in other parts of the country.
DING DING DING, we have a winner right out of the gate. The example given in the article states that Audrey Davison is living in a 4 bedroom house. She has the assets she needs to be independent. The whole idea that the town should chip in to support her lifestyle choices will create more people like her in higher taxes.
Lets look at the mindset of the town elders:
**“People shouldn’t have to sell their house, move away to a place with less taxes, leave behind their family and friends,” said Town Supervisor Paul Feiner
He envisions retired doctors mentoring schoolchildren, retired accountants helping with the town’s finances, retired lawyers offering their services for a discount. But there are plenty of less-skilled jobs that need doing, he said.**
This lady is paying $12,000 in property taxes. I didn’t stutter, $12,000 dollars a year. It is the 3rd most expensive tax rate in the country. It’s a self-fulfilling prophecy if the town creates make-work jobs for the elderly. They will end up increasing taxes, which will create a greater burden for people already having difficulty paying taxes. If she needs a job then she is free to get one without creating another layer of bureaucracy.
She needs to move to a cheaper location. Which is just about anywhere in the country.
I din’t say the house was big, I said the house must be expensive. It appears I was right.
Of course, a hours 20 miles from Manhattan may be expensive. So move 40 miles from Manhattan. It would be awful nice if Grandma could live in the same hours for 45 years and bake apple pies for the neighbours every week, but it’s not a social need the government should be addressing.
Here is a .pdf file that contains a table of property tax values that are state to state comparisons. Of course, the actual tax rates vary from county to county, and even municipality to municipality in the same county, in some cases. There are some surprises in there, once you see the map which has rates based on tax per $1k values. I’m still sitting on the fence on this issue though between the woman who been there much of her life and the local government that needs the money for maintenance of infrastructure, operating costs, etc.
The most populous states have higher rates per $1k, with the exception of California (most likely due to Prop 13), but the state still manages (barely on some levels) with a lower average tax revenue from property taxes. After looking at this table, part of me thinks that if you’re not a wage earner paying taxes in that state/county/municipality, then you are a viewed as a burden in that s/c/m, and will be eventually taxed out of that s/c/m, so a wage-earner will buy your home and keep the tax revenue flowing on both property and income tax, forcing a non-earner to a more tax-advantage area.
I think any wage-earner who is now retired should have some rights and breaks for putting in the time and money that helped put a majority of our infrastructure in place when it was more affordable back in the post-war era, than it is now. Kicking them to the curb doesn’t seem right, and breaks should be given…not $7/hour jobs…that’s pretty tacky. Some of them do volunteer work for free (if they are able to) anyways. My jury is still out on this one.
I guess it depends on how you look at it. I don’t see it as a matter of a social need, but whether or not we want our tax system structured so that it inevitably leads to kicking grandma out on the curb. If this were the only way to raise money, then we’d have to do it. But it isn’t the only way to raise money, and it galls me that pols just lap up the money they get in extra taxes just because there’s a real estate boom. Of course, it’s up to the people to keep the pols honest, and we did just that in CA when we enacted Prop 13. That created some new problems, but it’s still better than the way things were.
I tend to agree that “make work” jobs are a bad idea. I’d rather we looked at the actual tax code, and set it up so that no one has his property taxes increase a bunch just because housing prices are going up fast[er than the general rate of inflation].
Expensive is a relative term. $500,000 for a house is not expensive for a house in Westchester or Fairfield counties. It’s normal.
The “tragedy” is that Americans believe (or used to believe) that a person’s home was their castle and that once you own something, it can’t be arbitrarily taken away from you. I mean what is the point of a 30 year mortgage if you have to move out as soon as you pay it off?
Here in NJ, the property taxes are ridicuous. A few decades back my town started to build huge amounts of “Levittown”-type developments. This of course led to the need for lots of schools, and thus lots of property taxes, since most of the education costs in the great Garden State are funded by local property taxes. Old folks suddenly found that all their carefully-planned retirement strategies were shot to hell and back as the property taxes soared.
Back then, I was active in a local Taxpayers’ Association, and I learned a bit about the relationship between home values and property taxes. Basically, what’s important is not the absolute assessment of your real estate, but whether it’s assessed in a way that’s comparable to other similar property. If your assessment increases by, say, 25% that doesn’t necessarily mean your actual tax will increase by 25%. However, if for 25 years your property has been under-valued and now it’s correctly valued, yes, the taxes will increase. To put it in very simple terms, they add up all the assessed values in town, and divide that into the total budget to be funded by property taxes, and the result is the tax rate, usually expressed as a certain amount per thousand dollars of assessed value.
If your assessment is unfair, you can appeal it, first locally and then at the county level, and then if desired, to the state level. You cannot appeal the tax rate or the tax amount. I did about 3 or 4 tax appeals, and won all of them. It was my belief at the time that the tax assessor was jacking up the valuation of the property of those who were giving him the most problems. In one of my appeals, on a piece of vacant land my husband and I owned, I brought in the documentation of the actual purchase price of the property, from an arms-length open market sale the previous year. It was several thousand dollars less than the assessment. The county tax board was astonished. “Why did you do that, Roger?” they asked the assessor. “Well,” he answered, “the lot next door sold for more.” “So what?” the tax board replied. “You can’t assess a property for more than it cost to buy! Appeal granted.”
A couple of years later, I won another appeal at the county level against the same tax assessor. He appealed the county’s decision to the state, an act so bizarre that they didn’t even have a form for it – they had to take the reverse, of a taxpayer appealing the county’s decision, and cross stuff out and write in new language to somehow make it fit. I was furious. I was going to have to take time off from work to go to Trenton to deal once again with this @$$hole. And then, on Thanksgiving of that year, the tax assessor died! Woohoo! MwaaaaHaaaHaa! I’m alive, Roger, and you’re not! In due time, the new assessor contacted me to ask about what the state appeal was about. Dammed if I know. Oh, well, then, let’s just forget about it.
These days, there is a property tax reduction program for those over a certain age, I think 65. In order to really fix things, though, we need to stop depending on the value of what a person already owns to fund things like schools. As much as most of us hate income tax, at least if your income falls, your taxes decrease as well. Property tax just keeps on a-climbin’, no matter what. My sister lives in New Mexico. I don’t know how they do it, they seem to have reasonable schools and services, and her taxes on a very nice home including an in-ground swimming pool, are a fraction of mine.
Grandma isn’t being kicked out on the curb. The worst thing that is going to happen is that she has to sell her house and move into a smaller place. A single 76 year old does not need a four bedroom house.
Yeah, well we’re just using that as a metaphor. She is being kicked out of her family home, though. And keep in mind that “grandma” is a generic term for older people, not just this person in particular. It can happen at any socio-economic level.
Well, we are very fortunate to have you around to tell us what we do and don’t need! It’s a good thing that we don’t base our tax policy on the idea that you tax someone out of anything he or she doesn’t “need”.
$500,000 is expensive for a house. It may be typical for Westchester, but that is because houses in Westchester are expensive. Living in those places is a choice. I’d have to pay three times as much for a house in Los Gatos, CA as I would here, but then I could get my house for half the price in Shitburgh, Oklahoma. I’d really love to have a house right in Manhattan, actually, but guess what? I can’t afford it.
I should stress that I agree with John Mace in that property tax systems may be at fault for overtaxing based on property speculation and such. To be honest, I think property tax based wholly on assessed value is kind of a stupid idea.
Move to Mantouwadge, Ontario. Nice retirement community. Nice houses for about the price of a car.
Perhaps, but when it happens to the socio-economic level that has likely more than $500,000 it net worth it doesn’t even ping my sensitivity bone. Especially since one person living in a four bedroom house is incredibly wasteful.
What a joke. You don’t get out of paying taxes because you really, really like your expensive luxury.
Getting back to the issue of who pays for the physical infrastructure, here in Ontario new physical infrastructure is paid for when new developments go in. A problem arises when the stuff wears out after a few decades and needs to be replaced without a deep pocket new development to pay the old subdivision’s freight. In that sense, if seems fair enough to expect a person who has lived in a home for decades to continue to pay property taxes.
My mother is 83 and lives alone in a pretty nice 3 bedroom house and while no doubt she doesn’t “need” that much room, it is her house. She and my dad worked like galley slaves all their lives, brought up and educated 6 children, paid their taxes, contributed to their neighbourhood in countless ways, and were generally all-around good citizens. Their property taxes increased as the land increased in value, though. I was most interested to read that there are places where your property taxes are based on sometimes-50-year-old values! Mum can afford her taxes, but if she couldn’t they could be deferred until after her death. It is common here, in BC, for the city or municipal government to defer the property taxes for seniors. The deferred taxes are due when the property owner dies, the estate is billed.
It’s easy enough to say that any given old lady “should move” if she can’t afford to stay where she is, but that is often a death sentence. Attach the taxes owed to the property and get it when the old person finally does society a favour and just, you know, croaks.
(And I can’t quite buy the “let them work their taxes off” bit, either. At a munificent $7 an hour!!! Jeez. Could someone who’s already on their last legs live long enough?)
I kind of understand blaming the politicians, but really, if the community rose up and said " We don’t want to pay high property taxes, we want to pay income taxes instead" , do you think the politicians would care? I 'd be willing to bet that for every few “senior citizen can’t afford to pay the property taxes” cases, there’s one where people are (or were ) better off paying property taxes rather than local income taxes. For example, I knew of a couple who were both collecting taxable pensions. With them lived an adult child and spouse, both of whom worked. Their property tax was probably less than the income tax would have been on four incomes. People with high incomes who live in a relatively inexpensive house are also better off with the property tax method, as are people who expect their income to rise faster than the property taxes.
But not only can it happen at any socio-economic level, it can happen at any age, and I don’t feel any sorrier for retirees who can’t afford the taxes on the house they bought for $50,000 that’s now worth $500,000 than I do for the 40 year olds who can’t afford the taxes on the house they bought for $150,000 that’s now worth $500,000. I certainly don’t see why the 40 year olds should have to pay even more so that the retiree’s children can inherit the house.