7 ms·

I don't understand why they divide the appraised value by three, then compute 1.5% property tax from it and say they can't raise it any higher. Where I live, ou

I don't understand why they divide the appraised value by three, then compute 1.5% property tax from it and say they can't raise it any higher. Where I live, our property tax rate is higher even with a homestead exemption AND we don't divide by three. Simply removing the division would fix the revenue problem according to the article's math. More specifically, right now I just checked and I pay 1.6% of my home's appraised market value each year as property tax. Galesburg pays 0.5%. So there's an easy fix.

Findeton 5y ago
Don't people think it's just crazy having to pay the overlords a wealth tax? One thing is to pay for capital gains or new income, but you already paid taxes when you bought the house/property.
- imtringued 5y ago
  It is crazy to have private ownership over publicly funded services. The government built the infrastructure that made your plot of land valuable so it is only fair to pay a land value tax. If you don't do that then the rich will become your overlord instead and they charge as much as they can get away with.
- igorkraw 5y ago
  There are people (free market people, not communists) who'd argue the idea of owning land as a private person and extracting rent/speculation is folly itself and who'd argue you should either pay much higher taxes (Georgism) or they you should only be able to lease land from the community around you. Free market capitalism doesn't work well (in terms of social welfare) with natural monopolies, and land could be called the ultimate natural monopoly.
  - radu_floricica 5y ago
    Eh, that's an extreme position. Mostly we say that property taxes should be around half the land rent value, i.e. around half the value the property generates without taking into account what's built on it. This has the rather obvious difficulty of having to estimate the yearly value generated by the land itself, which is a topic too large for me (but solvable), while having a large number of advantages. It aligns incentives very very well, and that's hella important. If a municipality develops an area with proper regulation, infrastructure and various services, the land value grows which gives them extra income. It has a much more direct invest->income dynamic. It also incentivizes owners to be a lot more aligned to the interests of the community around them. You want to have a home with a large yard in the middle of the city, instead of developing it more in line with the location? You can, but you'll pay for it. It also forces owners to align to the community around them continuously. If currently you own a piece of land which is way underdeveloped, the only moment when anybody even cares about this is when it's being sold. As opposed to having to adjust each year to current land value and land taxes - you're not forced to do something about it, but it's surely on your mind a lot more when you see taxes grow. Ah, and it fixes NIMBY, and dramatically lowers rent. Apartment buildings are very efficient, so they'll be favored exactly where they make sense - in crowded, high-value land areas.
    - pessimizer 5y ago
      Why half? Is that just an arbitrary number?
      - radu_floricica 5y ago
        Theory says 100%, half is just a realistic target.
    - imtringued 5y ago
      Baden Würtemberg doesn't give a damn about the complexity of the assessment, they already have to assess land value for estate taxes. The assessment argument is actually complete rubbish. The assessment rules for the rest of Germany are significantly more bureaucratic. Assessing building value is an even bigger nightmare because you cannot automate the majority of assessment work. You also don't have to asess every single building. You can asess the value of bigger plots of land spanning multiple properties and allow an appeal process for special circumstances.
  - michaelt 5y ago
    > There are people (free market people, not communists) who'd argue [...] you should only be able to lease land from the community around you. At first this sounded like an extreme point of view to me - then I realised how often I've heard people saying there's nothing wrong or exploitative about being a landlord. We, as a society, see nothing wrong with people spending their entire lives living on rented property.
    - imtringued 5y ago
      The landlord can't exploit you, only the land owner can. It just turns out that they are usually the same person. In the case of the homeowner they are not. Also, if we consider taxation exploitative then we should limit it to resource based taxes like land value tax.
- tomschwiha 5y ago
  But isn't it that you also need repair stuff with your house? The same for public property - it's never "finished" and needs repairing, etc.
  - charcircuit 5y ago
    Money spent on taxes doesn't go to fix your own property.
    - meheleventyone 5y ago
      No it goes to fix the shared infrastructure. People would definitely like it less if they were billed for the infrastructure costs directly. For example it’s clear here that the downtown subsidises the sprawl.
      - charcircuit 5y ago
        But why take it out of property tax?
        imtringued 5y ago
        Are you going to tax income so landowners become richer at the expense of others? Do you want landlords to charge for public services that they did not provide?
        charcircuit 5y ago
        I don't know. I don't like paying any tax. Maybe you could have the government start companies to make money instead of taxing others. >Do you want landlords to charge for public services that they did not provide I'm not quite sure what you mean by this, but it's not legal to sell an item or service and then not give them that item / service.
- pessimizer 5y ago
  Do you think that it costs the government more to protect a homeless person or a person with a house? Do you think it costs the government more to protect a person with a house, or a person with a mansion? Piles of wealth require protection. Without government protection, they would be expropriated without considerable expenses on private security. Income tax is the tax that is hard to justify. Wealth taxes are taxes to protect wealth, and sales/transaction taxes are taxes to enforce sales and transaction agreements. Libertarians believe those should be the only functions of government. If you don't even believe in those, you're an anarchist, or maybe even a Mad Maxist. edit: imagine the absurdity of people sharing a rented shed paying as much for fire and police protection as a person in a mansion.
  - nivenkos 5y ago
    Yeah, income tax is the real evil. I live in Scandinavia, and the high income tax (and no property or inheritance tax) keeps the class system intact for generations. You can't work your way up when the government is taking almost 60% of your income. That said, I'd still prioritise abolishing sales tax on groceries and electricity here. Both are incredibly expensive and make life a struggle for a lot of working people.
    - mavhc 5y ago
      Most countries have more of a scaled income tax, but Sweden has 57% if you earn 1.5x the average. Why is that?
      - _vbnz 5y ago
        To keep the class system intact. The ultra-wealthy don't pay much more tax (and don't pay property or inheritance tax, and capital gains tax is also lower than income tax (wtf?)). It's a far less progressive country than the marketing would have you believe. And unfortunately all the political parties are just focussed on giving more money to the boomers or liberalising the housing market, so it won't change any time soon.
        5y ago
- PostOnce 5y ago
  Houses need roads and plumbing and a fire dept and electrical and all kinds of stuff, dog catchers and such. These things aren't a buy once product, they require maintenance fees. Civilization costs money, and its worth it.
- TulliusCicero 5y ago
  No, because the services you expect from living there do need to be paid some way or other. > One thing is to pay for capital gains or new income, but you already paid taxes when you bought the house/property. Servicing the property obviously costs ongoing money, so why wouldn't the taxes be ongoing?
- barnabee 5y ago
  No, I think property (or better, land value) taxes are probably the most justifiable of all taxes. You are occupying land, which is scarce. Noone else can use it, but except for some accident of history or geography you have no more right to one there than anyone else. It makes total sense that you compensate society for your use of the land. There is a lot to like about Georgism.
  - Proven 5y ago
- pessimizer 5y ago
  > Take for example the taxes I pay on my home. I pay $260.17 to the city every year in property taxes. I live on a 60 ft wide lot. If you take the $20/ft/year road maintenance metric, cut it in half because I’m just on one side of the street, and then multiply it by the width of my lot you get $600. I would need to contribute $600 a year through my property taxes to just pay for the maintenance of the portion of the street in front of my house. But I’m not, I’m contributing less than half. Almost no single family houses are contributing enough in property tax to support basic necessary maintenance of the street in front of their house. > The smallest lot width you can have in Galesburg with the current zoning code is 50ft in R3 districts. With that 50 ft lot you would need a house worth $98,500 just for the city to break even on the maintenance of your portion of the street. If you have a 100ft wide lot you need an assessed value of $197,000 to break even. While wide lots may be nice to have and historically how we’ve built housing, they have a tough time paying the city back for the services they consume. > Is every house and building going to pay for all the infrastructure it uses? No. There will be plenty that do not. Does that mean that corner lots have to be twice as valuable to pay for both the streets? Also no. Another way to look at properties in an apples to apples comparison is to use the metric of total property taxes paid per acre. Why is that? The greater the area the further road and water infrastructure needs to extend and the further away police and fire services need to travel. So comparing on a per acre basis is a good proxy for how productive it is for the city.
  - ChrisMarshallNY 5y ago
    I pay over $4,000, for a 75-foot-square lot. People marvel at how low my taxes are. The average around here, is three times as much. It doesn't bother me that much. I live in a fairly affluent area, with good services and infrastructure. The schools are also excellent.
airza 5y ago
It would let the revenues pay for the cost of the roads in the city, but not the rest.
r_hoods_ghost 5y ago
Yeah... I'm in the UK and my council tax (nearest equivalent) is currently about 1.7% of my house's value p/a, although council tax is fairly regressive and has a hard cap. Whenever I hear Americans complaining about how terrible their infrastructure is (and it is compared to every other developed country I've ever been to) I can't help but wonder why you don't do the obvious thing and just pay to fix it. edit 1.7% not 2.7%!
- arethuza 5y ago
  Interesting, our council tax here in Fife in Scotland is about 1% of our house valuation and that includes water supply and waste water.
  - r_hoods_ghost 5y ago
    Should have been 1.7% not 2.7%! Fat fingers. Combination of being in band C while living in a small flat that's not worth much.
- ajuc 5y ago
  UK has population density of 280 people per km2, most of Europe has over 100, USA has 36. It's ok if you put everybody in densely populated areas, but when you spread them around you either pay 10 times the taxes or get 10 times worse infrastructure. There's no cheating math.
  - ClumsyPilot 5y ago
    Unless you are paving the Nevada Desert, that comparison is basically useless - it includes areas where nobody lives so they need no maintenance.
    - ajuc 5y ago
      There are such areas in every country. USA might have more of them but not so much more that it cancels out the low population density entirely. You still have to have a road going through these areas.
PostOnce 5y ago
The city tax isn't the only tax, they also pay county (and other?) taxes raising the total well beyond 0.5%?
- PeterisP 5y ago
  Yes, but that's also an argument why "tripling the tax" isn't something impossible, since tripling the tax that goes to the city would mean a relatively small increase to the total property tax someone is paying.
beowulfey 5y ago
See the pie chart in the post again -- citizens of Galesburg are paying 9.89% property tax on their home, not 0.5%. There are a lot of other taxes that make up the total property tax. Your 1.6% is incredibly low, in my experience.
- sackofmugs 5y ago
  I don't believe their property taxes are 10%. $50,000 per year on a $500,000 home? Come on
  - sgerenser 5y ago
    According to the article, most houses are more like $50-$100k, but 10% would still be a very high property tax rate.
  - beowulfey 5y ago
    You’re right, I looked it up— it’s only 1.41%, I must have misread that chart myself. My state, they can go up to 7.5% so I didn’t really think too hard about it, but I think I’m desensitized to how crazy high that is…
Dumblydorr 5y ago
Doesn't Illinois have pretty high taxes to begin with? I'm not a tax expert but I've heard this repeatedly stated while living in Chicago.
macinjosh 5y ago
Yeah just charge the working families just scraping by that make up a town like this 3 times more. Jobs done! /s
kristjansson 5y ago
I don’t get that part either. OTOH, an effective property tax rate of 3.2% or so seems much more reasonable that the 9.8% percent implied by his table. Assuming people but anywhere close to as much house as they can afford, the city taking 10% per year seems just confiscatory.
wombatpm 5y ago
Illinois calculates property taxes off of 1/3 assessed value. Apparently it allows the rates to not have to go out to an insane number of digits. But it gets weirder. The city/county/ whatever determines their budget and uses property taxes to determine how that cost is allocated across residents. What happens when housing prices fall? Simple! They take a multiplier, and increase all assessments by some factor. People think property taxes set the budget, when in fact the budget sets properly taxes

Findeton 5y ago

Don't people think it's just crazy having to pay the overlords a wealth tax? One thing is to pay for capital gains or new income, but you already paid taxes when you bought the house/property.

imtringued 5y ago
It is crazy to have private ownership over publicly funded services. The government built the infrastructure that made your plot of land valuable so it is only fair to pay a land value tax. If you don't do that then the rich will become your overlord instead and they charge as much as they can get away with.
igorkraw 5y ago
There are people (free market people, not communists) who'd argue the idea of owning land as a private person and extracting rent/speculation is folly itself and who'd argue you should either pay much higher taxes (Georgism) or they you should only be able to lease land from the community around you. Free market capitalism doesn't work well (in terms of social welfare) with natural monopolies, and land could be called the ultimate natural monopoly.
- radu_floricica 5y ago
  Eh, that's an extreme position. Mostly we say that property taxes should be around half the land rent value, i.e. around half the value the property generates without taking into account what's built on it. This has the rather obvious difficulty of having to estimate the yearly value generated by the land itself, which is a topic too large for me (but solvable), while having a large number of advantages. It aligns incentives very very well, and that's hella important. If a municipality develops an area with proper regulation, infrastructure and various services, the land value grows which gives them extra income. It has a much more direct invest->income dynamic. It also incentivizes owners to be a lot more aligned to the interests of the community around them. You want to have a home with a large yard in the middle of the city, instead of developing it more in line with the location? You can, but you'll pay for it. It also forces owners to align to the community around them continuously. If currently you own a piece of land which is way underdeveloped, the only moment when anybody even cares about this is when it's being sold. As opposed to having to adjust each year to current land value and land taxes - you're not forced to do something about it, but it's surely on your mind a lot more when you see taxes grow. Ah, and it fixes NIMBY, and dramatically lowers rent. Apartment buildings are very efficient, so they'll be favored exactly where they make sense - in crowded, high-value land areas.
  - pessimizer 5y ago
    Why half? Is that just an arbitrary number?
    - radu_floricica 5y ago
      Theory says 100%, half is just a realistic target.
  - imtringued 5y ago
    Baden Würtemberg doesn't give a damn about the complexity of the assessment, they already have to assess land value for estate taxes. The assessment argument is actually complete rubbish. The assessment rules for the rest of Germany are significantly more bureaucratic. Assessing building value is an even bigger nightmare because you cannot automate the majority of assessment work. You also don't have to asess every single building. You can asess the value of bigger plots of land spanning multiple properties and allow an appeal process for special circumstances.
- michaelt 5y ago
  > There are people (free market people, not communists) who'd argue [...] you should only be able to lease land from the community around you. At first this sounded like an extreme point of view to me - then I realised how often I've heard people saying there's nothing wrong or exploitative about being a landlord. We, as a society, see nothing wrong with people spending their entire lives living on rented property.
  - imtringued 5y ago
    The landlord can't exploit you, only the land owner can. It just turns out that they are usually the same person. In the case of the homeowner they are not. Also, if we consider taxation exploitative then we should limit it to resource based taxes like land value tax.
tomschwiha 5y ago
But isn't it that you also need repair stuff with your house? The same for public property - it's never "finished" and needs repairing, etc.
- charcircuit 5y ago
  Money spent on taxes doesn't go to fix your own property.
  - meheleventyone 5y ago
    No it goes to fix the shared infrastructure. People would definitely like it less if they were billed for the infrastructure costs directly. For example it’s clear here that the downtown subsidises the sprawl.
    - charcircuit 5y ago
      But why take it out of property tax?
      - imtringued 5y ago
        Are you going to tax income so landowners become richer at the expense of others? Do you want landlords to charge for public services that they did not provide?
        charcircuit 5y ago
        I don't know. I don't like paying any tax. Maybe you could have the government start companies to make money instead of taxing others. >Do you want landlords to charge for public services that they did not provide I'm not quite sure what you mean by this, but it's not legal to sell an item or service and then not give them that item / service.
pessimizer 5y ago
Do you think that it costs the government more to protect a homeless person or a person with a house? Do you think it costs the government more to protect a person with a house, or a person with a mansion? Piles of wealth require protection. Without government protection, they would be expropriated without considerable expenses on private security. Income tax is the tax that is hard to justify. Wealth taxes are taxes to protect wealth, and sales/transaction taxes are taxes to enforce sales and transaction agreements. Libertarians believe those should be the only functions of government. If you don't even believe in those, you're an anarchist, or maybe even a Mad Maxist. edit: imagine the absurdity of people sharing a rented shed paying as much for fire and police protection as a person in a mansion.
- nivenkos 5y ago
  Yeah, income tax is the real evil. I live in Scandinavia, and the high income tax (and no property or inheritance tax) keeps the class system intact for generations. You can't work your way up when the government is taking almost 60% of your income. That said, I'd still prioritise abolishing sales tax on groceries and electricity here. Both are incredibly expensive and make life a struggle for a lot of working people.
  - mavhc 5y ago
    Most countries have more of a scaled income tax, but Sweden has 57% if you earn 1.5x the average. Why is that?
    - _vbnz 5y ago
      To keep the class system intact. The ultra-wealthy don't pay much more tax (and don't pay property or inheritance tax, and capital gains tax is also lower than income tax (wtf?)). It's a far less progressive country than the marketing would have you believe. And unfortunately all the political parties are just focussed on giving more money to the boomers or liberalising the housing market, so it won't change any time soon.
      - 5y ago
PostOnce 5y ago
Houses need roads and plumbing and a fire dept and electrical and all kinds of stuff, dog catchers and such. These things aren't a buy once product, they require maintenance fees. Civilization costs money, and its worth it.
TulliusCicero 5y ago
No, because the services you expect from living there do need to be paid some way or other. > One thing is to pay for capital gains or new income, but you already paid taxes when you bought the house/property. Servicing the property obviously costs ongoing money, so why wouldn't the taxes be ongoing?
barnabee 5y ago
No, I think property (or better, land value) taxes are probably the most justifiable of all taxes. You are occupying land, which is scarce. Noone else can use it, but except for some accident of history or geography you have no more right to one there than anyone else. It makes total sense that you compensate society for your use of the land. There is a lot to like about Georgism.
- Proven 5y ago
pessimizer 5y ago
> Take for example the taxes I pay on my home. I pay $260.17 to the city every year in property taxes. I live on a 60 ft wide lot. If you take the $20/ft/year road maintenance metric, cut it in half because I’m just on one side of the street, and then multiply it by the width of my lot you get $600. I would need to contribute $600 a year through my property taxes to just pay for the maintenance of the portion of the street in front of my house. But I’m not, I’m contributing less than half. Almost no single family houses are contributing enough in property tax to support basic necessary maintenance of the street in front of their house. > The smallest lot width you can have in Galesburg with the current zoning code is 50ft in R3 districts. With that 50 ft lot you would need a house worth $98,500 just for the city to break even on the maintenance of your portion of the street. If you have a 100ft wide lot you need an assessed value of $197,000 to break even. While wide lots may be nice to have and historically how we’ve built housing, they have a tough time paying the city back for the services they consume. > Is every house and building going to pay for all the infrastructure it uses? No. There will be plenty that do not. Does that mean that corner lots have to be twice as valuable to pay for both the streets? Also no. Another way to look at properties in an apples to apples comparison is to use the metric of total property taxes paid per acre. Why is that? The greater the area the further road and water infrastructure needs to extend and the further away police and fire services need to travel. So comparing on a per acre basis is a good proxy for how productive it is for the city.
- ChrisMarshallNY 5y ago
  I pay over $4,000, for a 75-foot-square lot. People marvel at how low my taxes are. The average around here, is three times as much. It doesn't bother me that much. I live in a fairly affluent area, with good services and infrastructure. The schools are also excellent.

airza 5y ago

It would let the revenues pay for the cost of the roads in the city, but not the rest.

r_hoods_ghost 5y ago

Yeah... I'm in the UK and my council tax (nearest equivalent) is currently about 1.7% of my house's value p/a, although council tax is fairly regressive and has a hard cap. Whenever I hear Americans complaining about how terrible their infrastructure is (and it is compared to every other developed country I've ever been to) I can't help but wonder why you don't do the obvious thing and just pay to fix it. edit 1.7% not 2.7%!

arethuza 5y ago
Interesting, our council tax here in Fife in Scotland is about 1% of our house valuation and that includes water supply and waste water.
- r_hoods_ghost 5y ago
  Should have been 1.7% not 2.7%! Fat fingers. Combination of being in band C while living in a small flat that's not worth much.
ajuc 5y ago
UK has population density of 280 people per km2, most of Europe has over 100, USA has 36. It's ok if you put everybody in densely populated areas, but when you spread them around you either pay 10 times the taxes or get 10 times worse infrastructure. There's no cheating math.
- ClumsyPilot 5y ago
  Unless you are paving the Nevada Desert, that comparison is basically useless - it includes areas where nobody lives so they need no maintenance.
  - ajuc 5y ago
    There are such areas in every country. USA might have more of them but not so much more that it cancels out the low population density entirely. You still have to have a road going through these areas.

PostOnce 5y ago

The city tax isn't the only tax, they also pay county (and other?) taxes raising the total well beyond 0.5%?

PeterisP 5y ago
Yes, but that's also an argument why "tripling the tax" isn't something impossible, since tripling the tax that goes to the city would mean a relatively small increase to the total property tax someone is paying.

beowulfey 5y ago

See the pie chart in the post again -- citizens of Galesburg are paying 9.89% property tax on their home, not 0.5%. There are a lot of other taxes that make up the total property tax. Your 1.6% is incredibly low, in my experience.

sackofmugs 5y ago
I don't believe their property taxes are 10%. $50,000 per year on a $500,000 home? Come on
- sgerenser 5y ago
  According to the article, most houses are more like $50-$100k, but 10% would still be a very high property tax rate.
- beowulfey 5y ago
  You’re right, I looked it up— it’s only 1.41%, I must have misread that chart myself. My state, they can go up to 7.5% so I didn’t really think too hard about it, but I think I’m desensitized to how crazy high that is…

Dumblydorr 5y ago

Doesn't Illinois have pretty high taxes to begin with? I'm not a tax expert but I've heard this repeatedly stated while living in Chicago.

macinjosh 5y ago

Yeah just charge the working families just scraping by that make up a town like this 3 times more. Jobs done! /s

kristjansson 5y ago

I don’t get that part either. OTOH, an effective property tax rate of 3.2% or so seems much more reasonable that the 9.8% percent implied by his table. Assuming people but anywhere close to as much house as they can afford, the city taking 10% per year seems just confiscatory.

wombatpm 5y ago

Illinois calculates property taxes off of 1/3 assessed value. Apparently it allows the rates to not have to go out to an insane number of digits. But it gets weirder. The city/county/ whatever determines their budget and uses property taxes to determine how that cost is allocated across residents. What happens when housing prices fall? Simple! They take a multiplier, and increase all assessments by some factor. People think property taxes set the budget, when in fact the budget sets properly taxes