Noob question - Why do residential property taxes take into account quality of construction?
No logical explanation, and property taxes SUCK as a way of financing municipal services and schools. They don't take into account your ability to pay into the system. For someone with a good income and a modest home property taxes are probably awesome, but for someone with a lower income they can be crippling. And for freelancers who may alternate good years with bad years financially property taxes are a huge headache.
cameronsim said:
Apologies if this has been asked many times before, as a reasonably new resident of the US I've never come across a logical explanation of why the quality of ones property is taken into account for the annual tax calculation. It does consider numbers of rooms but seems far more focused on how nice a house is rather than its footprint and cost to the local ecosystem.
As a quick comparison (but not necessarily better) In the UK, property taxes are based on a calculation that takes into account the number of bedrooms and the implied costs to local services (police, sanitation, roads, schools, park and rec. etc).
Cars aren't taxed on their quality (as far as I know) but more so their fuel economy and environmental footprint...is it stupid to consider that houses aren't treated the same way?
I'm sure I'm just asking a stupid question and there is a perfectly logical explanation accepted by all residents...can someone please explain?
It's because property tax assessments are supposed to be based on the Market Value of the home and that value is clearly affected by quality of construction as well as other factors. How well the system succeeds in this is another issue.
cameronsim said:
Cars aren't taxed on their quality (as far as I know)...
In the US, sales tax on cars is a percentage of their purchase price. (there are sometimes rebates to incentivize various things like fuel efficiency).
For property tax, they are attempting to estimate the would-be purchase price of each house, and then taxing based on a percentage of that estimated purchase price. So, it is a similar concept (although it's not a sales tax). There are also sometimes rebates for senior citizens and/or low income homeowners.
sprout said:
cameronsim said:
Cars aren't taxed on their quality (as far as I know)...
In the US, sales tax on cars is a percentage of their purchase price. (there are sometimes rebates to incentivize various things like fuel efficiency).
For property tax, they are attempting to estimate the would-be purchase price of each house, and then taxing based on a percentage of that estimated purchase price. So, it is a similar concept (although it's not a sales tax). There are also sometimes rebates for senior citizens and/or low income homeowners.
I've only heard of property tax freezes for low income seniors. Low income residents do get a homestead rebate, but it is a couple of hundred dollars, not enough to offset the thousands due in property taxes.
In regards to sales tax on a car, you pay that once when you purchase the vehicle, not every single year you own the car.
Think of this as a property tax (pun not intended). The higher the current market value of the property (what the property can be expected to sell for under present market conditions) the higher the assessment is apt to be assuming all other factors are equal. Factors like quality of building materials used, recency of kitchen/bathroom updates, neighborhood in which the property is located, proximity to a desired feature such as the train station or a desired school, etc. have a significant impact on a house's market value and therefore impact on the real property tax assessment. Since the real property tax on the property itself affects what a given real property will likely sell for, we go through frequent reassessments and revalutions even when all other factors remain equal.
joan_crystal said:
Think of this as a property tax (pun not intended). The higher the current market value of the property (what the property can be expected to sell for under present market conditions) the higher the assessment is apt to be assuming all other factors are equal. Factors like quality of building materials used, recency of kitchen/bathroom updates, neighborhood in which the property is located, proximity to a desired feature such as the train station or a desired school, etc. have a significant impact on a house's market value and therefore impact on the real property tax assessment. Since the real property tax on the property itself affects what a given real property will likely sell for, we go through frequent reassessments and revalutions even when all other factors remain equal.
Nice explanation. Tax assessments made on the estimated market value, sounds like townships applying a capital gains tax (collected annually) to home owners whether they sell the property or not.
It seems like extending your property and increasing its impact on the land and community = pay more in tax. But also, making your kitchen nicer (and probably more energy efficient) = pay more in tax.
I find that somewhat illogical and seems like a brute force method to local taxation.
Or, alternatively, you're not paying an up front sales tax based upon a one-time valuation, but a rolling tax recalculated at regular intervals, but still value-based. The only difference is timing. A one-time tax can't possibly be a viable funding source.
No. Just no. A property tax is a type of wealth tax. Your real property is an asset, the only one that the local community has the tools to appraise. So you are taxed by your local wealth to pay for local services.
While the arguments about the regressiveness of property taxes are on their faace accurate, they are incomplete. Income taxes and transaction taxes (sales or vat) are more accurate measures of an individual's activity in the economy, but not entirely the best measure of a person's wealth. On the other hand, real property is illiquid, which can make paying taxes more combersome.
From a budgeting point of view, a government's income is probably best constructed from a variety of taxes and fees. Income taxes, especially progressive ones, are seen as fair and tax liquid assets. They can vary sharply however from year to year as the economy trends up and down, which can be a big issue for government solvency.
Transaction taxes tend to be more regressive but actually better at capturing economic activity and liquidity. They also vary by year.
Property taxes are the most stable stream of income, since tax rate is determined from the budget, and not from anticipated economic activity. From a budgeting point of view, it is the mst secure stream.
Where New Jersey screws it up is by relying too heavily on local property taxes instead of redistributive mechanisms. This imbalance is self reinforcing, as richer towns can overspend to the detriment of poorer, which then increases property values in richer towns, attracting wealthier residents who can then afford higher taxes.
Property taxes hit lower income people harder, even if they don't own, since the landlords have to raise rents to cover taxes. Section 8 housing has wait lists that are years long, so though there is assistance out there it is obviously not reaching anywhere near all the people who need it. I'm not saying there shouldn't be property taxes, but they shouldn't be the main source of income for a town. Funding for school systems also needs to be completely revamped as our current system is just a wreck.
For better or worse, the taxes are based on the relative value of your house. So if you have 4 bedrooms, 2 new baths, and a new kitchen your house will be worth more then your neighbors if they have 4 bedrooms, 2 old bathrooms, and an old kitchen.
We don't take into account the burden on services (e.g. a 5-person family versus a retired couple in equivalent houses).
yahooyahoo said:
We don't take into account the burden on services (e.g. a 5-person family versus a retired couple in equivalent houses).
When it comes to the sewer bill, that's one of my pet peeves. I own a tiny two-family house with one person in each apartment plus a vacant accessory apartment. I pay $750/year for sewer, while a family of eight with servants, a pool, etc., pays just $250.
kthnry said:
yahooyahoo said:
We don't take into account the burden on services (e.g. a 5-person family versus a retired couple in equivalent houses).
When it comes to the sewer bill, that's one of my pet peeves. I own a tiny two-family house with one person in each apartment plus a vacant accessory apartment. I pay $750/year for sewer, while a family of eight with servants, a pool, etc., pays just $250.
That's a tricky one. I see your point, but there isn't an effective way to measure sewer use. Where I used to live it was a percentage of the water bill, maybe that is better.
FilmCarp said:
kthnry said:
yahooyahoo said:
We don't take into account the burden on services (e.g. a 5-person family versus a retired couple in equivalent houses).
When it comes to the sewer bill, that's one of my pet peeves. I own a tiny two-family house with one person in each apartment plus a vacant accessory apartment. I pay $750/year for sewer, while a family of eight with servants, a pool, etc., pays just $250.
That's a tricky one. I see your point, but there isn't an effective way to measure sewer use. Where I used to live it was a percentage of the water bill, maybe that is better.
A poop-o-meter maybe?
FilmCarp said:
kthnry said:
yahooyahoo said:
We don't take into account the burden on services (e.g. a 5-person family versus a retired couple in equivalent houses).
When it comes to the sewer bill, that's one of my pet peeves. I own a tiny two-family house with one person in each apartment plus a vacant accessory apartment. I pay $750/year for sewer, while a family of eight with servants, a pool, etc., pays just $250.
That's a tricky one. I see your point, but there isn't an effective way to measure sewer use. Where I used to live it was a percentage of the water bill, maybe that is better.
Maybe tie it to number of bedrooms. That's somewhat related to the number of occupants, which would be somewhat related to usage. Does it make sense for a small one-bedroom apartment to pay the same amount as a splendid six-bedroom house with maids' quarters?
A percentage of water bill would make sense. I think that's how it was done in other places I've lived.
I wonder how the sewer bill is calculated for commercial businesses that use a lot of water, such as car washes and restaurants.
kthnry said:
yahooyahoo said:
We don't take into account the burden on services (e.g. a 5-person family versus a retired couple in equivalent houses).
When it comes to the sewer bill, that's one of my pet peeves. I own a tiny two-family house with one person in each apartment plus a vacant accessory apartment. I pay $750/year for sewer, while a family of eight with servants, a pool, etc., pays just $250.
When I lived in Houston, our sewer bills were tied to our water bills and, therefore, more closely based on usage. That seems to be a fairer way to do it.
@max_weisenfeld, that's an outstanding explanation. If you don't like your situation, at least it helps to know how things got to be this way.
A friend lives in PA, and he says there is a 1% state income tax on all income and goes to schools. You pay when you can, and when you lose your income, you don't pay, so it's not much of a burden. And the schools get funded. I like the sound of that.
FilmCarp said:
kthnry said:
yahooyahoo said:
We don't take into account the burden on services (e.g. a 5-person family versus a retired couple in equivalent houses).
When it comes to the sewer bill, that's one of my pet peeves. I own a tiny two-family house with one person in each apartment plus a vacant accessory apartment. I pay $750/year for sewer, while a family of eight with servants, a pool, etc., pays just $250.
That's a tricky one. I see your point, but there isn't an effective way to measure sewer use. Where I used to live it was a percentage of the water bill, maybe that is better.
Yup ... pretty easy calculation to base sewer bill on actual water usage. What comes out must go down.
CapnMarko said:
Yup ... pretty easy calculation to base sewer bill on actual water usage. What comes out must go down.
Not really. Ever water your lawn? Have kids play in the sprinkler? I know my water bill is higher in the Summer.
Steve said:
CapnMarko said:
Yup ... pretty easy calculation to base sewer bill on actual water usage. What comes out must go down.
Not really. Ever water your lawn? Have kids play in the sprinkler? I know my water bill is higher in the Summer.
It isn't 100% sewer usage based, but a lot closer than a fixed fee per household like we have now.
I know that where I used to live, there were exceptions for certain water usages. The one I recall was filling a swimming pool, which happens quite rarely per household and doesn't impact the sewer system. You could contact the water company if that was happening in order to avoid having sewer charges applied to that portion of the bill.
@sac - I'm fully aware, but the post I responded to spoke in absolutes.
Steve said:
CapnMarko said:
Yup ... pretty easy calculation to base sewer bill on actual water usage. What comes out must go down.
Not really. Ever water your lawn? Have kids play in the sprinkler? I know my water bill is higher in the Summer.
Exactly because they measure how many gallons you use, so if and when you use more water they know and can charge appropriately.
Steve said:
@sac - I'm fully aware, but the post I responded to spoke in absolutes.
I stand by my absolutes. The what comes out must go down was being silly, but no place for silliness when we are talking of sewers.
Water usage seems like the best way to gauge sewer usage (as there is no meter on that and who would want to check it.) I do get the difficulty in terms of budgeting but think that can be incorporated. If the sewer tax is based on let's say a penny a gallon and your large family uses 20,000 gallons over the course of the year and me in my one bedroom condo with separate water meter and a hot plate use 5,000 gallons of water your bill would be $200 and mine $50.
Or if it is covering a fixed cost we could divide up the cost of the tax per gallon based on that so if we need $100,000 lets say for covering our 'sewer' fees as a community and we use a million gallons everyone pays 10 cents a gallon sewer tax which could pretty well approximate your household sewer usage or at least do so better than um you got a house you pay X. It's a two family okay 2X, triplex 3X regardless of actual usage.
In my opinion.
I guess having a meter on your sewer line could be a problem when it clogs!
I think the real reason it is a fee is that it can then be charged to Seton Hall as well, and in a different amount. Not usage based, and not a tax.
That's probably true on the SHU fee vs tax bit, but does the fixed amount make it a "fee"? There's no such thing as a "variable fee" or "use-based fee"? Or did I just inadvertently define "tax"?
ctrzaska said:
That's probably true on the SHU fee vs tax bit, but does the fixed amount make it a "fee"? There's no such thing as a "variable fee" or "use-based fee"? Or did I just inadvertently define "tax"?
Utility bills are use-based. Why shouldn't sewer just be handled like any other utility? I assume SHU pays usage-based water, electric and gas bills, don't they? So why not sewer?
Apologies if this has been asked many times before, as a reasonably new resident of the US I've never come across a logical explanation of why the quality of ones property is taken into account for the annual tax calculation. It does consider numbers of rooms but seems far more focused on how nice a house is rather than its footprint and cost to the local ecosystem.
As a quick comparison (but not necessarily better) In the UK, property taxes are based on a calculation that takes into account the number of bedrooms and the implied costs to local services (police, sanitation, roads, schools, park and rec. etc).
Cars aren't taxed on their quality (as far as I know) but more so their fuel economy and environmental footprint...is it stupid to consider that houses aren't treated the same way?
I'm sure I'm just asking a stupid question and there is a perfectly logical explanation accepted by all residents...can someone please explain?