Houses Are Down 30+ Percent, So Why Do Property Taxes Continue To Go Up

Posted By on December 22, 2010

Nationally, property taxes now dominate local tax revenues. The problem is once the local government obtains that gargantuan revenue stream as it has, it becomes the “baseline of dependency” for all future years, and that’s exactly what’s going on now!
 
But there is a small ray of sunshine here.  A heads up…..Homeowners in most locales can petition the property assessor’s office to lower the assessed value of their homes and if granted the reductions in value can substantially lower your property taxes. 
  
You might think that with home prices off by 30% or more since the housing/credit bubble popped in 2006,  that your property taxes would have declined by a similar percentage. But you’d be wrong….they’ve actually gone up.

Though house prices have declined roughly 30% nationally since the 2006 peak of the housing bubble, property taxes have continued their decade-long rise, jumping $45 billion (over 10%)  just since 2008.

Nationally, property taxes now dominate local tax revenues. Property taxes tripled from 1990 to 2005 in Florida.  But once the local government obtains that gargantuan revenue stream, it becomes the “baseline” for all future years.

According to U.S. Census Bureau data, the nation’s local governments will collect an estimated $476 billion in property taxes in 2010–almost double total state income tax revenues of $250 billion and considerably more than total sales tax revenues of $286 billion. That means property tax revenues are 66% higher than sales tax revenues–$190 billion more a year.

A decade ago, property taxes were roughly equivalent to sales taxes. In 2000, property taxes totaled $247 billion and sales taxes came in at $223 billion– a differential of roughly 10%. Sales taxes have increased by 28% since 2000– roughly in line with the rise in consumer prices (as calculated by the Bureau of Labor Statistics).

Property taxes, meanwhile, have far outstripped inflation, soaring from $247 billion in 2000 to $476 billion in 2010–a gargantuan increase of $229 billion, or 92%.

California property taxes have been limited to 1% of assessed value by the voter-mandated Proposition 13, passed in 1978. Assessed value is limited to a 2% increase per year. Additional parcel taxes can be added only through voter-approved bond measures and “special assessment districts” which fund municipal water districts, libraries and other local government services.

But assessed values are re-set to market valuations when a property is sold. As millions of homes were sold during the boom years, the assessed value of those homes skyrocketed, reaping huge increases in property taxes for local governments in California.

 More at: http://www.businessinsider.com/property-taxes-rising-2010-12

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