November 21, 2009

Preemptive Rebuttal on Property Taxes

Justin Katz

Yes, the common advice is simply to ignore NEA-RI Assistant Executive Director Pat Crowley, and for psychological purposes, that is certainly an attractive approach. Its problem is that it's in Crowley's nature to rush to expose more broadly forming strategies and flaws in thinking of the local left. So, when he devotes so much of his time as a professional agitator to proving that Rhode Island's property taxes really aren't that bad — here and here — we can be assured that we'll see such nonsense begin to spread as a self-justifying common knowledge among the segment of Rhode Island society whose selfish or vain interests are dragging the state down.

There's a bit of irony to this tack. After all, when progressives have brought up property taxes, it's typically been to decry the fact that they're regressive, as Tom Sgouros explains:

Property tax is regressive because the value of the house or apartment you live in doesn't scale with your income. If you earn $50k, you probably live in a house or unit worth $300k (give or take). If you earn $500k, you probably don't live in a house worth $3 million. Instead, your house is likely worth $800k or a million. So ten times the income goes to three times the taxes.

With reference to Sgouros, there's also some conflict with Crowley's latest spin in that the former has tended to ignore property taxes as a percentage of home value in order to stress the fact that the rates are lower where the values are higher, while the latter wishes to use high property values in order to explain why the government ought to be able take more money. The two leftists illustrate nicely why regular citizens are wise to be suspicious of statistics, because they can be twisted in multiple directions per the rhetorical needs of the propagandist.

So, take a moment to absorb all of the multiple rankings provided in Crowley's Tax Foundation source, limited to Rhode Island and the abutting counties of Massachusetts and Connecticut (Bristol County, RI, not included because of small population, not low rank). Rhode Island counties are shaded red, Massachusetts, blue, and Connecticut, green.





And for good measure, here's a similar chart for median incomes:

For the state-by-state comparison, Crowley likes the measurement by percentage of value for obvious reasons, even though progressives typically prefer to measure all taxes against income (to show that the rich don't pay enough). In fairness, my usual argument with respect to different taxes is that, if it's justified for the government to tax a particular transaction (sales or income) or property, then it should set rates according to the value of the thing being taxed, without adjusting for some external consideration. If we've decided that a town should receive its revenue from property taxes, then it ought to set a rate for all property, and those who possess a greater portion rightly pay proportionally more. That's fair. Otherwise every tax becomes a form of income tax.

For the purpose of deciding whether a particular state's property taxes are comparatively high, though, the percentage of home value isn't but so useful. For one thing, there's dollar value and there's the value to the user; taxes for a two-bedroom hovel might cost $4,000 per year in Rhode Island, but $1,000 in some other state. For another thing, the cost of government doesn't go up but so much based on residential property values. That is, it doesn't cost much more to send firefighters to a $200,000 hovel than a $75,000 hovel or to educate the children living in them.

If the question is whether the state of Rhode Island and its municipalities extract a large tax burden from their residents, the income comparison is more appropriate. As the above figures illustrate, even though Rhode Islanders have higher income than the median for the country, we pay an even larger percentage of that income in property taxes, and even though our counties' median incomes are dispersed among those of abutting counties, they cluster at the top for percentage of income absorbed in property taxes.

Comments, although monitored, are not necessarily representative of the views Anchor Rising's contributors or approved by them. We reserve the right to delete or modify comments for any reason.

For the average potential homebuyer, the first order of business should be to use common sense and not buy a house that is beyond what you can handle. For a family with two-incomes, consider what you would do if one partner lost his or her job. Would your savings cover the mortgage until the other person found a job? Would one income cover it? If you live alone, do you have enough socked away "just in case"? Perhaps a family only making $50 K a year should not be living in a $300,000 home. Better to have a smaller, less luxurious home that you could actually keep in the event of an emergency than one that is really beyond your resources and eventually ends up in foreclosure. Property taxes are definitely steep in some areas, but choosing a home that is within the appropriate range for one's income is at least one safeguard against becoming homeless.

Posted by: Tabetha at November 21, 2009 1:30 PM

Justin-Tom Sgorous is actually capable of serious thought as opposed to agitation and vomiting propaganda.

Posted by: joe bernstein at November 21, 2009 2:25 PM

Even though it's barely even a tangent, to go along with Tabetha's comment, after taxes and insurance, someone making $50k a year brings home about $3,000 a month. A $300,000 house's mortgage, assuming 20% was put down, plus taxes and insurance, would run about $2100 a month, leaving $900 a month for everything else. Yeah, no wonder people are foreclosing left and right.

If you earn $50k a year, you're living in a tenement apartment for about $800 a month. Show me someone who makes that much money that can afford just about any kind of mortgage and I'll show you someone who put A LOT down.

I love Tom's magical numbers.

Posted by: Patrick at November 21, 2009 10:30 PM

In Crowley's world, someone making $50,000 gets free health and dental insurance and a free pension. Easily worth a grand in the real world.

Besides, isn't homeownership a right? Haven't you been listening to Barney Frank? Homeownership has nothing to do with what you can afford.

Posted by: George at November 21, 2009 11:16 PM

Oh, yes, home ownership is an inalienable right. So is free health care coverage.

I'm sure the omission of these items from the American Constitution was a simple oversight on the part of the framers ...

Posted by: Monique at November 22, 2009 11:53 AM

If you listen to that snake-oil salesman,Jim Vincent,he seems to imply that home ownership is a right,particularly if you are a member of a "protected class"(I think that means everyone except a heterosexual male of European descent)and who does he work for?RI Housing.Gotta love it.Or not.

Posted by: joe bernstein at November 22, 2009 7:43 PM

What good was it to help people buy homes that they could not keep? In the end, the people who got homes that they could not afford did not benefit. Why not advise people on a multiyear pathway towards homeownership that includes a savings plan and, if necessary, futhering education and training to advance in one's career? Oh, that's right - those in the mortgage industry would not make money if they did that. Homeownership should be viewed as a goal that one approaches with a plan, not as a right that people jump into before they are ready. I think most people can own (reasonably priced)homes eventually if they are willing to save and plan. In fact, in some cases owning is cheaper than renting. It is not a bad goal. Again, I think that it comes down to having a reasonable goal as well. Instead of the "dream house" why not focus on the "reality house"? The one that you might actually be able to not only purchase but keep?

Posted by: Tabetha at November 22, 2009 10:11 PM
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