Property revaluation shifts tax from business to residents

[ramapo]

How's this for a boom for business?

The tax assessor was busy this past year as our town underwent a full reassessment. The town politicos cautioned residents not to panic, that the reevaluation is revenue neutral, your assessed value goes up but the tax rate goes down.

We got our new tax bills a couple of weeks ago. Our property taxes increased about 23%. I didn't expect such an increase since my house was reassessed about five years ago after we added on. My informal survey of other residents shows increases of 10% to 40%+ (ouch).

In my case, there was a 3x increase in the value of the land and about a 2x value in the house. The tax rate was cut in half so if it wasn't for the increase in land value, I would've been revenue neutral.

But virtually everyone I knew had their taxes go up significantly. So the question was, whose taxes went down?

The answer was provided at last night's council meeting. The housing bubble has drastically increased the value of housing in town while business property values have languished. So the burden of taxation shifted significantly toward the homeowner and the businesses have gotten a big tax break. So much for "business rateable".

Since virtually every large business in town protests its assessment anyway, and the town always caves in to avoid a costly legal battle, the politicos pointed out that there would now be more predictable tax payments (like the businesses won;t continue to protest their assessments).

Simply amazing...

[tk2kewl]

1. The townsfolk should be bringin pitch-forks to the next town meeting

[ramapo]

3. Amazingly not...

There were a lot of upset people a couple of weeks ago but that meeting was cancelled due to a power failure. Far fewer people showed up last night, and nobody had taxes as their central complaint. People were talking about more trivial issues.

There's a school referendum next month for new construction. I'm sure it will fail as this is the only spending that people get to vote yea or nay.

The biggest topic for discussion last night was the council voting to keep their free health benefits and not allow a referendum on the subject. The Republican majority voted to keep their welfare program intact!

[CrispyQ]

2. The corporate slaves must bear all costs

while the corporate officers laugh all the way to the bank.

Will your taxes go down when the bubble bursts?

[ramapo]

5. Nope

Not until the next reevaluation. These are only done every 10 yrs or so

[StClone]

4. I saw this coming as home owners moved up the value scale

Low rates spurred "investing" rather than affordability and utilitarianism of new homes purchased. Naturally the tax would increase with the higher valued properties purchased, but now there is an increase on the increase as local Govs search for funds to replace those depleted under the Bush Economic/Tax plans.

[dcfirefighter]

6. Property taxes combine

one of the most harmful taxes with the least harmful. (maybe even beneficial) taxes.

One of the most harmful taxes (after payroll taxes) is a tax on buildings. Such a tax discourages housing, decreases homeownership, discourages building (and the employment of the building trades), and encourages hoarding land - buying a plot of land and leaving it vacant, or severely underbuilt, and waiting for the community around it to add value to the property.

The least harmful tax is the tax on land property: it raises revenue without discouraging production (as there is no one employed producing land)(unlike wage and sales taxes). It encourages highest and best use - which discourages sprawl (and the associated transport costs, time, energy, and pollution). It captures public improvements, such as schools, transit, and public safety. A shift to it TENDS to financially relieve homeowners (70% of the time) while increasing revenue from commercial landowners. The commercial landowners are usually absentee landowners who lease their property to businesses. The nature of the tax is that it falls on the landowner, not the tenant (so long as the landowner is charging full market rates already).

Several states allow this sort of tax . . . you should look into it.

http://www.urbantools.net/

[ramapo]

7. I'll read up on it

NJ property taxes are used to fund local and county governments and most significantly schools. These taxes have skyrocketed over the past 20 years as the federal and state governments have shifted costs down to the local level. The big deal made by governors, senators, and presidents about cutting our taxes is really empty rhetoric because the overall tax burden has only increased over the years. We all know which sectors have seen their taxes decrease, the very wealthy and business.

People are of course angry about their taxes but NJ is the epitome of home rule. The state has around 500+ municipalities. My county has more than 70. Each has its own police, fire, DPW, school, etc. infrastructures. The costs are tremendous. My county has more fire equipment than New York City to fight a fraction of the number of fires.
Talk of consolidation or a move to regional(county) government is akin to treason. But this is one of the few ways to cut costs.

People want the services but don't want to pay. Now we're paying a larger share while businesses reap higher profits.

[dcfirefighter]

8. You're right about NJ FD's

I assume it's the same for every other municipal service.

There are links to reports Paterson and Jersey City on this page:
http://www.urbantools.net/archive.htm

[ramapo]

9. Seems like a good idea for cities

I wasn't aware of the land value tax alternative. It seems like it would be an excellent solution to many of the problems faced by the older cities. I live near Paterson yet never read of this study or heard of any recent discussion in regards to changing the property tax formulation in any of the North Jersey urban areas.

I don't know if it would work in the developed suburb though. My town, if I had to guess, is probably 80-85% residential. There is a small central business area, one "industrial park" (office & warehouse), and the scattered supermarkets, restaurants, and gas stations. I imagine a land valuation tax may shift even more of a tax burden onto residential taxpayers and might even make the tax more regressive since lot sizes do not always match home value.

It is an easy exercise to determine the effect of a shift towards a land value tax and I might try and get the actual statistics for our town in order to do the calculations.

[dcfirefighter]

10. It's generally accepted that this should start in urban areas

Though it's not a tax on lot sizes - a large lot off the beaten path is less desireable than a small lot on the corner of two large thoroughfares. Put another way, the lot on the corner receives more benefits than the one off the beaten path (and should pay more for those benefits).

I think you'll be suprised at how much value is in those small, corner, commercial lots.