The problems with property taxes- an opening discussion

Beauty is only skin deep.

Beauty is in the eye of the beholder.

When it comes to property tax appraisals in Dayton- both of these come into play. However, neither is helping us.

I’ve heard people say: “I don’t want to fix up the outside of my house because the property taxes will go up” and they are perfectly right. However, their home values may drop in the meantime.

I’ve heard people complain that their neighbors fixed up their houses and it cost them more, because their property taxes wend up, and they’re right too- but, their home may have appreciated thanks to their neighbors’ work.

Right now, with property values in a state of flux due entirely to factors beyond our control (thanks to the “casinoization of Wall Street”) an appraisal of your home value for sale or for tax value is as accurate as a corporate valuation by a rating service just before the crash- remember that 2 weeks before AIG folded, someone gave it a premium rating.

Just because someone is willing to pay a price for my home, according to an appraiser, it may not be worth it. There is no scientific system in place, it’s like arguing over who the greatest baseball player ever was- it’s all conditional.

How should we build a fair, honest, property tax valuation system? One that will do what the current system fails to do- namely, increase everybody’s wealth and make our community stronger.

Right now, we’re continuing to build new inventory, while our population is shrinking. This causes oversupply, and causes prices to drop. If we realized this, we’d put a cap on the number of homes that can be built when population is not growing, or require the removal of real estate from the market to allow new construction. Call it a cap and trade system for homes.

Secondly, what decides property value? Raj Soin has had a running argument with Greene County that his mansion isn’t worth that much to anyone but him- and he may be right. But, then again, the former Hook estate was looked at as a pink elephant when it was owned by the county- which gave it away, only to have a savior pump a lot of money into it and restore it- only to have its property tax go up (after the abatement ends). Should taxes penalize someone for fixing something up? Obviously not- since we want nice neighborhoods.

Since buildings are one of the leading consumers of energy, which is of finite supply, and has environmental consequences for all of us- maybe we should look at taxation based on energy consumption? Sound like the Fair Tax argument?

While we may want to look the other way about the cost of heating and cooling homes- in the long run, that’s what costs all of us. Wars are fought over fossil fuels (mostly oil) and with the environmental damage affecting everything from the oceans to our crops, we’ve got to start being proactive.

I had originally thought that an equation of square footage, year built, and condition of the home should be factors to use, but when I thought about age of homes- and conditions, value judgments came to play. I like old homes better- others like new. Where do we set the premium. From a basic accounting/depreciation standpoint, old homes require more upkeep- and the value over time decreases- but, then again, you have something like the Hook estate make it too complicated.

But, then again- does that mean an empty home, that uses little energy is a good thing? Not at all. We want people, preferably employed in our community- living in those homes. Without people, homes are worthless, they become a liability. Not only that, but higher density living (more people per square foot) is more efficient. The American dream of a single family home is actually hurting us because of the energy demands. So, the more people in a building, the better it is for the community- as long as it is still a useful steward of energy. Efficiency should be rewarded.

We also need to look at commuting costs- since transportation is another way we burn fuel. If we rewarded both homeowners with lower property taxes for living closer to work (or working from home- or using public transport) we’d burn less fuel. If we rewarded commercial properties based on the number of people they employ who live close- we’d incentivize Here In My Backyard as opposed to the Not In My Backyard type connections to the community. I proposed a “walk to work tax credit” idea long ago on this site, right after seeing “An Inconvenient Truth.”

Healthy communities in the future have to find different ways to do the things they’ve always done. Choosing how to tax people and their property has to be not only fair- but as a way to further goals of the whole community. Getting people to use less energy is critical to our nation’s survival and future growth.

While the condition of a home is all a matter of opinion, the amount of water, gas, electricity used, per person in a building- and their commutes to and from work, are all a matter of record- and it would put you in charge of what your tax impact will be, not some appraiser. All of a sudden, those new “Lite House” green homes on Patterson start to make a lot more sense.

I’m just starting my idea process on this matter, I’d like your help and input. Do you have better ideas on how to properly and fairly value real estate for taxation? If you do, please contribute to the conversation in the comments.

Thanks

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54 Responses

  1. Gene July 1, 2009 / 8:42 am
    Michael, fyi, if you rent you are paying property tax. That is part of the rent charge. Don’t be so naive.

    I believe in non-aggression, but I also believe in covering your ass.

    Also, a libertarian can believe in a smaller (yet strong) army. Just because the X’s and O’s of the party clearly state one thing does not mean that I can not deviate a bit. That is the fucking problem with America. How the hell did everyone get lumped into group A or B.

    I believe in the libertarian party, yet I do not 100% agree with everything. Grow up a little Michael. Just a little. A Junior Varsity bench warmer can understand that not everything or everyone is 100% on this or that.

  2. David Lauri July 1, 2009 / 9:20 am
    I wonder if not refusing to file U.S. income taxes is the same as not paying income taxes in one’s country of residence.
  3. David Lauri July 1, 2009 / 9:21 am
    err, strike the first “not” in that prior post
  4. Michael July 1, 2009 / 11:15 pm
    @Gene

    Michael, fyi, if you rent you are paying property tax. That is part of the rent charge. Don’t be so naive.
    Gotta live somewhere…I feel less bad not paying it directly.

    I believe in the libertarian party, yet I do not 100% agree with everything.

    I’m not talking party, but philosophy. The non-aggression principle is tantamount to claiming that you’re a “libertarian”. Otherwise, Glenn Beck and Neal Boortz would be “libertarians” rather than the statists they are.

    @David
    I wonder if not refusing to file U.S. income taxes is the same as not paying income taxes in one’s country of residence.

    I didn’t file in Japan until I founded my own company, upon which my employees’ needs and security trumped my personal issues with tax. If I get in trouble, they don’t have jobs. Now we do everything by the book, unfortunately, but that’s the cost of doing business as a serf.

    As for the U.S., I’m legally required to file even though I don’t earn a single penny there. That’s outright slavery, as if they own me no matter where I am. I’ll never file.

    Anyway, my point is that I try to live as free as possible on my own, and encourage others to do the same. When I can evade laws and taxes, I do.

    This thread is getting way off topic, so I’ll save my energy for another one down the road, rather than go in circles some more.

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