3 ms·

That’s bs. In Texas you pay just 1-3% property tax. That’s it. Car registration is dirt cheap (<$100/year), housing is dirt cheap (200k get you a house with a

That’s bs. In Texas you pay just 1-3% property tax. That’s it. Car registration is dirt cheap (<$100/year), housing is dirt cheap (200k get you a house with a swimming pool), electricity is super cheap (when it is not snowing) and gasoline is almost half price compared to California.

deleted 4y ago
[deleted]
dd36 4y ago
There’s no such thing as a free lunch. It all comes from somewhere. Texas does a better job of obfuscating and shifts more of the burden to lower incomes.
xienze 4y ago
Yeah I’m really curious about the methodology here. Property tax is surely higher, but then again property values are a good bit lower. Income tax is certainly lower in TX (hard not to be). Sales tax I’d wager is lower in TX as well, at least on average. Not sure about utilities, but it’s not hard to have cheaper electricity than CA. Gas is no contest. So what’s the angle here? Things that make you go hmmm…
- hindsightbias 4y ago
  It all rolls down the counties who have to pay for everything. So they raise your valuation 20% a year (if you're in an avg market). For the last 10 years. And then the rate goes from 1.2% to 1.9% over the same time. And that doesn't even cover highway use, as they've all got tolls now. With no Prop 13, anyone who picked the right hood as poor or middle class can no longer afford to stay.
briandrupieski 4y ago
1-3% property tax seems to line up with their breakdown for property tax: https://itep.org/whopays/texas/ https://itep.org/whopays/texas/ Looks like most of it comes from sales and excise taxes.
mbesto 4y ago
You need to read the detail. If your home's value outpaces your wage increases (on an absolute basis, not for a like-for-like percentage), then you could pay more as a % of your income in TX than CA. Let's say you bought a house for $100k 10 years in a small town in Texas. People start moving in, but you still only make $50k/year. Now your house is worth $500k. That 1-3% property tax still hits your income.
- reddog 4y ago
  That’s true. But you’re also $400,000 wealthier. So you got that going for you. Which is nice.
- jjk166 4y ago
  Yeah but in addition to your $50k/yr salary, you're gaining $40k/yr in home equity. You can sell your house and move to a cheaper area and pocket the difference. Of course if you're struggling with day to day expenses you probably can't wait for 10 years for a big pay day, but even this can be dealt with by financing. Further, the big problem here is ridiculous growth in property prices. While obviously some areas do occasionally experience a few years of exceptional growth, it would be dumb to assume that any given area is going to 5x in property value in 10 years. Even if it did in the past, such growth should not be expected to continue in perpetuity. Over the long term, property appreciation rates average around 4% annually, over 10 years you ought to expect a 100k house to go up in value to 148k. By comparison, assuming a 3% raise every year on average and no job changes, someone starting at 50k/yr should be making 67k/yr after a decade. Under such normal circumstances, a 2% property tax with no income tax would have a tax to income ratio of 4% versus 12% for a 10% income tax and 1% property tax. The rate of change in tax to income ratio is better with the income tax, a 2% increase in 10 years versus a 10% increase, but still it takes 166 years for for the high property tax option to overtake the income tax option. While some people may get unlucky (if you can call your net worth skyrocketing unlucky), going with the high property tax option is objectively the better strategy.
  - mbesto 4y ago
    Over 50 years, the difference is even more striking. After accounting for inflation, home prices have jumped 118% since 1965, while income has only increased by 15%, according to a separate report by online brokerage Clever Real Estate, based on Census data. https://www.cnbc.com/2021/11/10/home-prices-are-now-rising-much-faster-than-incomes-studies-show.html https://www.cnbc.com/2021/11/10/home-prices-are-now-rising-m...
hindsightbias 4y ago
You aren't getting a $200K house with pool anywhere anyone on HN wants to live. The median house valuation in Frisco TX will reach $1M in a year or two. And that's just a random suburb nobody outside of TX has ever heard of.
- dhd415 4y ago
  You're right that $200K won't buy a house with a pool in most desirable parts of Texas, but your quip about $1M houses in Frisco is misleading. Frisco is not just a "random suburb nobody outside of Texas has heard of." It's a very desirable suburb on the fast-growing north side of the DFW Metroplex.
  - hindsightbias 4y ago
    There are dozens of burbs just like Frisco, and that’s just DFW alone.
deleted 4y ago
[deleted]
deleted 4y ago
[deleted]

deleted 4y ago

[deleted]

dd36 4y ago

There’s no such thing as a free lunch. It all comes from somewhere. Texas does a better job of obfuscating and shifts more of the burden to lower incomes.

xienze 4y ago

Yeah I’m really curious about the methodology here. Property tax is surely higher, but then again property values are a good bit lower. Income tax is certainly lower in TX (hard not to be). Sales tax I’d wager is lower in TX as well, at least on average. Not sure about utilities, but it’s not hard to have cheaper electricity than CA. Gas is no contest. So what’s the angle here? Things that make you go hmmm…

hindsightbias 4y ago
It all rolls down the counties who have to pay for everything. So they raise your valuation 20% a year (if you're in an avg market). For the last 10 years. And then the rate goes from 1.2% to 1.9% over the same time. And that doesn't even cover highway use, as they've all got tolls now. With no Prop 13, anyone who picked the right hood as poor or middle class can no longer afford to stay.

briandrupieski 4y ago

1-3% property tax seems to line up with their breakdown for property tax: https://itep.org/whopays/texas/ https://itep.org/whopays/texas/ Looks like most of it comes from sales and excise taxes.

mbesto 4y ago

You need to read the detail. If your home's value outpaces your wage increases (on an absolute basis, not for a like-for-like percentage), then you could pay more as a % of your income in TX than CA. Let's say you bought a house for $100k 10 years in a small town in Texas. People start moving in, but you still only make $50k/year. Now your house is worth $500k. That 1-3% property tax still hits your income.

reddog 4y ago
That’s true. But you’re also $400,000 wealthier. So you got that going for you. Which is nice.
jjk166 4y ago
Yeah but in addition to your $50k/yr salary, you're gaining $40k/yr in home equity. You can sell your house and move to a cheaper area and pocket the difference. Of course if you're struggling with day to day expenses you probably can't wait for 10 years for a big pay day, but even this can be dealt with by financing. Further, the big problem here is ridiculous growth in property prices. While obviously some areas do occasionally experience a few years of exceptional growth, it would be dumb to assume that any given area is going to 5x in property value in 10 years. Even if it did in the past, such growth should not be expected to continue in perpetuity. Over the long term, property appreciation rates average around 4% annually, over 10 years you ought to expect a 100k house to go up in value to 148k. By comparison, assuming a 3% raise every year on average and no job changes, someone starting at 50k/yr should be making 67k/yr after a decade. Under such normal circumstances, a 2% property tax with no income tax would have a tax to income ratio of 4% versus 12% for a 10% income tax and 1% property tax. The rate of change in tax to income ratio is better with the income tax, a 2% increase in 10 years versus a 10% increase, but still it takes 166 years for for the high property tax option to overtake the income tax option. While some people may get unlucky (if you can call your net worth skyrocketing unlucky), going with the high property tax option is objectively the better strategy.
- mbesto 4y ago
  Over 50 years, the difference is even more striking. After accounting for inflation, home prices have jumped 118% since 1965, while income has only increased by 15%, according to a separate report by online brokerage Clever Real Estate, based on Census data. https://www.cnbc.com/2021/11/10/home-prices-are-now-rising-much-faster-than-incomes-studies-show.html https://www.cnbc.com/2021/11/10/home-prices-are-now-rising-m...

hindsightbias 4y ago

You aren't getting a $200K house with pool anywhere anyone on HN wants to live. The median house valuation in Frisco TX will reach $1M in a year or two. And that's just a random suburb nobody outside of TX has ever heard of.

dhd415 4y ago
You're right that $200K won't buy a house with a pool in most desirable parts of Texas, but your quip about $1M houses in Frisco is misleading. Frisco is not just a "random suburb nobody outside of Texas has heard of." It's a very desirable suburb on the fast-growing north side of the DFW Metroplex.
- hindsightbias 4y ago
  There are dozens of burbs just like Frisco, and that’s just DFW alone.

deleted 4y ago

[deleted]

deleted 4y ago

[deleted]