Home sales (or the lack thereof) continue to dominate the media these days. And despite realtors touting it as a buyers’ market, it seems that largely, buyers are staying away.
It’s not just the sub-prime fiasco that has some buyers running scared. In some places, like Philadelphia, many taxpayers are concerned about what’s going to happen to property taxes. As the values of homes have increased (and in some places, such as parts of California, they’ve actually skyrocketed), property taxes have also risen. This makes sense because in most areas, property taxes are keyed directly off of the value of real estate.
But the more that I think about this, the more that I wonder if that’s a fair method of assessing tax. In most cases (though not all), those who have more expensive homes can afford more expensive taxes. But it’s also clear that the more expensive taxes do not correlate to more services. Let me explain what I mean…
I live in the Wissahickon section of Philadelphia, near the park. It is one of the prettiest areas of the City. It is also, statistically, the safest area of the City. And, because it is solidly middle class, it is also stable in terms of home values. My home is assessed at several times more than a similar sized home in, let’s say, Kensington, an area of the City that has clearly seen better times – and with the City’s crime issues these days requires enormous numbers of police (not to mention other services).
However, in terms of services, I would venture to say that my area of the City also costs taxpayers much less than Kensington costs taxpayers. Policing is less necessary – and thus, less expensive. And when the City needs help – whether it’s cleaning the street, or buying extra bikes for the police, our business owners pitch in with a contribution through our Neighborhood Improvement District. Our residents regularly clean the parks (the 100 Steps, LaNoce and Gorgas all have regular, organized efforts) which means less work for the overwhelmed, underfunded parks workers. And… well, you get the picture.
So, we pay more for less. It is a problem that has caused many homeowners to flee the City. But we’re not alone in that regard. Many taxpayers all over the country pay proportionately more for property taxes for arguably fewer services (I note this isn’t always the case because some high dollar districts also get extraordinary amounts of services, like Manhattan). Is this fair?
That brings me to today’s Fix the Tax Code Friday question:
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Should property taxes be based on an inherently flawed formula that assesses taxes on fair market value? Is it just a reality that those with more can afford to pay more? Or is there a better alternative?