question about property taxes

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Quick question and please excuse my ignorance on the subject. Here in Chicago our schools are funded by local property taxes. Which to me has is causing much of the inequality in school system. For example the schools in the poorer part of the city where the property taxes are lower or not paid due to vacant houses or low accessment or whatever are in ruins. In seems like a screwed up way to fund a school system. I agree with Thom about a progressive property tax system but what would that do with our already ailing school systems amd other services funded by local property taxes?

thanks

jason25k's picture
jason25k
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Sep. 14, 2011 3:00 pm

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He said that schools shouldnt be funded by property tax or only prop tax at least.

Coincidentally, I was talking to an old guy last night who is $5000 behind on his prop tax. He's working out a deal with the city to pay a little at a time. He bought the hose for $11,000 in 1970 and its now worth $600,000 because of gentrification and he's retired with wife and handicapped child.

Erik300's picture
Erik300
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Apr. 2, 2010 9:44 am
Quote Erik300:

He said that schools shouldnt be funded by property tax or only prop tax at least.

Coincidentally, I was talking to an old guy last night who is $5000 behind on his prop tax. He's working out a deal with the city to pay a little at a time. He bought the hose for $11,000 in 1970 and its now worth $600,000 because of gentrification and he's retired with wife and handicapped child.

If I were him I would sell quickly and thank God the Republicans are running government.. If the Dems have their way, and we go back to the tax plan that Hartmann wants, he would pay 91% tax on his amazing untaxed $589,000 capital gain.

THISAA's picture
THISAA
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Dec. 16, 2011 5:49 am
Quote THISAA:
Quote Erik300:

He said that schools shouldnt be funded by property tax or only prop tax at least.

Coincidentally, I was talking to an old guy last night who is $5000 behind on his prop tax. He's working out a deal with the city to pay a little at a time. He bought the hose for $11,000 in 1970 and its now worth $600,000 because of gentrification and he's retired with wife and handicapped child.

If I were him I would sell quickly and thank God the Republicans are running government.. If the Dems have their way, and we go back to the tax plan that Hartmann wants, he would pay 91% tax on his amazing untaxed $589,000 capital gain.

Yes, I asked him why he doesnt sell and rent and he says that he has too much stuff to move and would need a big place to rent which would be too expensive. He said he's waiting until he passes and then his wife and child could have a house and estate sale, which would make a lot of money also, and move into a small place at a low cost.

Erik300's picture
Erik300
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Apr. 2, 2010 9:44 am

If Obama gets his way your friend cannot afford to die. They want to redistribute inheritance money to others.

THISAA's picture
THISAA
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Dec. 16, 2011 5:49 am

Most schools are paid for by property.taxes, however, I think your property taxes should be two fold.

Based off of the property value to pay for the other stuff besides schools and than an added percentage for each child you have. That way people with no children are not paying for schools they will never use and the people with large families will be paying for what they use.

As it stands now the neighbor with 5 kids is paying less per student then the neighbor with no kidd.

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workingman
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Mar. 20, 2012 7:13 am
Quote THISAA:

If Obama gets his way your friend cannot afford to die. They want to redistribute inheritance money to others.

Well I guess they have Social Security as a safety net. I dont think the estate tax they are talking about would effect him anyway. It was supposed to effect estates over $5 million if I remember correctly.

So you think its alright to redistribute wealth to offspring who might be unemployed and lazy but not anybody else?

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Erik300
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Apr. 2, 2010 9:44 am

Notice that it is not the actual proposed tax on big estates above a generous bottom line and with plenty of exclusions for farms, etc. It is the idea of having anything "taken" to be used by other citizens that irks them. It is "their" money, even if that is a false economic notion to begin with. These are the lovers of freedom who want it for themselves by denying and excluding themselves from any serious social relationship with others.

If the idea of the Commons is too controversial to the lovers of enclosed property and mortgage defined freedom, how about the idea of "the village" as the glue behind the "invisible hand's" purported ability to sort out the interplay of individual interests and come up with the "common good?" I thought conservatives were concerned with values and the preservation of structure and design while the radicals were ready to build the new, modern "liberated' world. The argument supposes that individuals with "their money" will use it wisely or at least in ways that "energize" the economy. Charity will be able to meet the needs the economy does not. Incredibly, our conservatives want us to believe that human beings are basically good and rational; and able to choose what will be best for themselves and others freely.

Unless it is about abortion.

In commerce, they oppose regulations and cannot see the value of the public sector other than to subsidize the private sector. I think there is considerable practical business experience being confused with economics, and yet there is an essential flaw about money and value throughout. Those who are trying to keep businesses up and running and a lot of MBA holders who have been catechized at Biz School do see government as "the problem." Even were government well-funded and respected, it is normal for those applying for permits to resent the process and be unaware of many of the issues and the experience that has made the regulations necessary.

Government officials resent being insulted and disregarded, but there is also value in a user-friendly process that could be had were they better diplomats and willing to work with people more. Some are, and the point I am making is only that it is not fun to discover that there are hoops and hurdles to get through and that neither applicant nor official is meeting each other with generosity of spirit.

Complaining about government is an essential civil right. But it only comes with a commitment to democracy and not as an immature whine. "The worst except for all the rest" is still worth our time and attention rather than the back of our hand. Where are our conservatives with this sense of the fragility of our progress and humility about power? It appears they have drunk deeply of hubris and have pledged themselves to democracy without government and freedom if you can afford it.

drc2
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Apr. 26, 2012 11:15 am

Call me cruel, but there are lots of people with less than $600k with bigger problems.

chilidog
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Jul. 31, 2007 3:01 pm

Property taxes are a rip-off. They are a tax on an unrealized capital gain. Imagine if everyone who own stock was taxed on current market value. As soon as 5-10% of the home/stock owners try to cash in, the price drops. Capital gains taxes deal with actual gains. Property taxes do not. Perhaps property taxes for buildings should be based on replacement cost minus depreciation.

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Pierpont
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Feb. 29, 2012 1:19 pm
Quote THISAA:

If Obama gets his way your friend cannot afford to die. They want to redistribute inheritance money to others.

After reading several of your posts... do you have ANY opinion that's not foolish? Do you have ANY idea why inheritance taxes were raised a century ago?

Pierpont's picture
Pierpont
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Feb. 29, 2012 1:19 pm

I don't understand what you mean when you say property taxes are a tax on unrealized capital gain. In California if the assessed value of real property declines 10%, the property tax declines 10%. Same thing with car taxes.

chilidog
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Jul. 31, 2007 3:01 pm

Quote chilidog:

I don't understand what you mean when you say property taxes are a tax on unrealized capital gain. In California if the assessed value of real property declines 10%, the property tax declines 10%. Same thing with car taxes.

Just what is the "assessed value"? If Cal is like Mass it's looking at comparative sales, perhaps only 1-2% of all homes, then applying those prices to all similar homes. And that's my point. If everyone who's home tries to cash in at a price set by a small sampling of sales, then that prices collapses. Supply and demand. Yet all those property owners are taxed as if their home is worth that market price. As for what one actually pays. In Mass we had Prop 2 1/2 which limited property taxes to 2.5% of assessed value. So yes property "values" can fluctuate. What local Assessors can do is simply play with the rate. So if a house was "worth" $500k with a tax rate of 1%, then their taxes would be $5000. If property values crashed and comparative sales showed that house was now "worth" $250k the rate could increase to 2% and the tax could still be the same $5000.

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Pierpont
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Feb. 29, 2012 1:19 pm

In California the property tax rate is basically 1%, with additional various local assessments. I don't know if that 1% is limited by state law. I'm not aware of any counties that collect, say, 0.5%, and then if they want raise it to 1.0%, which seems to be what you're describing in Mass.

We also have Proposition 13, passed in 1978, which limits the annual assessed increase in value to 2%. So if your house increases in value 5%, your property tax will only increase 2%. And I just learned this year, I don't know how long this has been going on (we pass new preferential property tax laws every other year here) if home values decline, your property tax will always decline. So my parents' home which they bought in 1960 and the assessed value is a fraction of the market price, actually paid LESS property tax in 2011 than in 2010.

Things were better here before Prop 13. Of course there are other factors, but Prop 13 is a big one.

chilidog
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Jul. 31, 2007 3:01 pm

Quote chilidog:We also have Proposition 13, passed in 1978, which limits the annual assessed increase in value to 2%.

Prop 2 1/2 was modeled on Prop 13. Aside from limiting taxes, there was a fairness issue. People who built their homes in 1950 for $20k were paying way less in taxes than someone who spent $75k in 1980. The intent of reassessing property values to find a market price for all properties, old and new, was to make the system more fair. But like I said the market price is based on sales of perhaps 1-2% of all properties a year. If 5-10% of the homeowners try to cash in at their assessed price, the market price would drop. So the vast majority of property owners are paying a tax on the paper value of their home. It's as if stock owners were taxed based on current market value of their stocks instead of what they would actually get when the sold them. That current market price is set by a tiny percentage of buyers and sellers then that price is applied to ALL the stocks even though they're NOT on the market. Everyone thinks they're rich based on their monthly portfolio report. It's an easy way to stimulate the economy since people then spend more.

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Pierpont
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Feb. 29, 2012 1:19 pm

Home values in the Atlanta metro area have declined dramatically, and the city continues to rank among the worst affected in the country (Case-Shiller report here: http://www.standardandpoors.com/servlet/BlobServer?blobheadername3=MDT-T...).

While it is true that county governments have raised the millage rates to make up the difference, it appears that there may be some hanky-panky going on in the way of seemingly systematic and widespread over-assessment "errors." This is, of course, disproportionately affecting the ability of working families and older adults to remain in thier homes. Many have seen their 2012 assessment raised 50-100%! The "solution" being offered is to suggest that homeowners file for a temporary appeal online, which can result in up to a 15% assessment reduction. The taxes due on the 85% balance must then be paid. (I personally went through the appeal process for my 2011 taxes, and my hearing date was set for ~6 months after my last payment was due. My presentation to the Board was on May 7, and I am still waiting to hear back.) The other side to the "appeal" fix is the obvious fact that many do not have the wherewithal to prepare for and go through the process.

Thom, being that you once lived in the Atlanta area, this article may interest you:

"Some DeKalb Homes See Assessments Soar"

http://www.ajc.com/news/dekalb/some-dekalb-homes-see-1453530.html

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sashasue
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