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Tuesday, August 31, 2010

Home Values Fell 16% in 2008, But Property Taxes Rose 4.2%

Tax Foundation, Property Tax Revenue Increased As Property Values Fell:

The Case-Shiller index, a popular measure of residential home values, shows a drop of almost 16% in home values across the country between 2007 and 2008. As property values fell, one might expect property tax collections to have fallen commensurately, but in most cases they did not.

Data on state and local taxes from the U.S. Census Bureau show that most states' property owners paid more in FY 2008 (July 1, 2007, through June 30, 2008) than they had the year before (see Table 1). Nationwide, property tax collections increased by more than 4%. In only four states were FY 2008's collections lower than in FY 2007: Michigan, South Carolina, Texas and Vermont. And in three states—Florida, Indiana and New Mexico—property tax collections rose more than 10%.

Rank

State

Increase

Per Capita Tax

1

Florida

11.7%

$1,649

2

Indiana

11.6%

$1,089

3

New Mexico

10.2%

$568

4

Hawaii

9.7%

$977

5

Nevada

9.2%

$1,241

6

Alabama

9.1%

$495

7

West Virginia

8.7%

$683

8

Oklahoma

8.4%

$582

9

Minnesota

7.6%

$1,273

10

California

7.6%

$1,449

 

 

 

 

U.S. Average

4.2%

$1,352

 

 

 

 

41

Alaska

2.4%

$1,559

42

Iowa

2.4%

$1,245

43

New York

2.3%

$2,009

44

Tennessee

2.0%

$752

45

Ohio

1.8%

$1,178

46

Maryland

0.6%

$1,171

47

South Carolina

(1.7%)

$963

48

Michigan

(2.4%)

$1,443

49

Texas

(3.8%)

$1,393

50

Vermont

(4.9%)

$1,896

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Comments

The problem with examining data, and not context, is that it can be misleading to the point of useless.

Many large metro areas do not reassess annually; Cook County, for example, reassesses every three years. And assessments are based on sales, another misleading metric. So, with that in mind, it shouldn't be surprising that assessments go up in a declining market - the assessed value is based on year-old data. Add to that the fact that the assessments are fairly static for a period of time, and viola - numbers that seem oddly out of place.

Posted by: TaxHacker | Aug 31, 2010 3:07:06 PM

Unfair and regressive property taxes are a major factor in turning people against taxes generally. Legal scholars are careful to distinguish between income and property taxes. Voters sometimes don't.

Posted by: mike livingston | Aug 31, 2010 6:42:07 PM

This is why most state taxing authorities want to decouple property assessments from the market. Increases in property tax rates usually involve a vote. But, holding property assessment values below the market allows the compassionate central authority to adjust assessments upward as needed. If you protest, threats to equate market valuations to the property assessment sends the owner in retreat. Increase revenue w/out a vote. Accept, Cope and Obey.

Posted by: SuhrMesa | Aug 31, 2010 10:57:30 PM

How does property assessments remaining the same explain taxes increasing?

Posted by: Dave Schuler | Sep 1, 2010 6:30:22 AM

This is a big problem. Thanks for bringing attention to it.

I hope we see future coverage on your fine blog that hammers the 40%+ jump in minimum wage and unemployment for young males (especially African Americans) since Democrats took over congress.

They did this directly into a recession. Bad policy anytime...stupid policy going into a recession.

Is it a political liability for Congressional Democrats? Yes.

But more important in the fullness of time....it's piss poor economic policy that is hurting access to the job market and future economic prospects for a whole generation.

Posted by: Army of Davids | Sep 1, 2010 7:27:08 AM

Locally (a small town in North Texas) everyone's land value went up and challenges were denied on the grounds that the land was only reassessed every three years. Of course, the problem is now most homes (land and building) are now taxed for more than you could sell them for and more than last year's taxes.

and yes, we think it's intentional. Anything to squeeze more money out of the taxpayer.

Posted by: Kevin | Sep 1, 2010 7:37:26 AM

My house was being assessed for far more than its FMV, so I had an independent appraisal made and I submitted that with a property tax return to dispute the currrent assessed value. The county rejected it with this explanation - "We disagree with taxpayer." Now, I have to go before the Board of Equalization, which is in bed with the Appraisers Office, and then I get to take them to Superior Court. They want to make it hard on taxpayers. What a bunch of crooks.

Oh, you should see the artwork on their walls. For instance, there's a picture of John Wayne holding a revolver in one hand and a rifle in the other with the caption, "What do you mean your appraisal's too high?" Real funny, except for all the extra taxes their attitudes are costing me.

Posted by: Woody | Sep 1, 2010 8:17:55 AM

Hey, if local governments don't go up on the property taxes, they can't fund their pensions and grant hard-earned raises. If that happens they'll just have to cut back on some of the services they are so famous far. We couldn't live with that, just ask the good citizens of Belle, CA.

Posted by: willis | Sep 1, 2010 8:37:36 AM

You would expect tax assessment to be a lagging indicator to assessed value, which is a lagging indicator to real estate prices. The article would be better if we knew, historically, how far out that lag is, but I suspect years would be the appropriate measure.

It does feed into the strong mene that the political class has the economy in a choke hold and inadvertently is strangling the entire country. I believe that, but this isn't convincing data, imho, until we get further out from the fall in housing prices.

Not saying I expect per capita tax to drop significantly in the future either, especially in the states that are fiscally "underwater".

Posted by: pashley | Sep 2, 2010 11:34:10 AM

Have you correlated taxes -- property, income, business -- with unemployment rates and/or in and out migration by state? Or property taxes with foreclosures, delinquencies and the like?

Posted by: Terry Kirkpatrick | Sep 3, 2010 9:18:44 AM