All of Mr. Rubin's charts and discussions are rather confusing and redundant. His point is that even if your tax bill stays the same from one year to the next, tax amount as a percentage of market value has increased since your property value has decreased. His gripe has nothing to do with budget methodology but instead is focused on the decline in market value of the property.I welcome the above comment for a number of reasons:
One's mortgage payment doesn't fall when the home price falls. One's heating bill doesn't fall when the home price falls. One's car payment doesn't fall when the home price falls. One's food price doesn't fall when the home price falls. Why exactly should property taxes be any different?
Using Mr. Rubin's rationale, property tax bills should have doubled from 2001 to 2009 simply because home prices doubled in that time period.
Municipalities have no control over the market value of property. They do have control over expenditures and assessments.
- The commenter appears to understand and accept my argument.
- I agree with most of what the commenter says.
- His/her comment gives me a great opportunity to clarify some things. Here goes:
Hmmm. I did my best. Please say more specifically what needs clarification.
“The Charts and Discussions Are Redundant”
I couldn't agree more!!! I feel like I've been writing the same thing over and over, in numerous posts spanning more than a year. It's only recently that a few people have shown that they understand what I'm saying. Hopefully, I'll not need to keep doing this much longer.
“Why Should Property Taxes Be Different From Mortgage, Heating Bill, etc.?”
Great question! The question can be rephrased as, “Since mortgage payment, heating bill, car payment, etc. do not fall when the home price falls, why should property taxes be any different?”
Unlike other household expenses, property taxes are directly coupled to your current home price. The coupling is through the tax rate. The ratio of your property tax to your home price is essentially your tax rate in dollars per thousand dollars of market value. The tax rate measures how steeply your property is taxed. If your tax amount does not fall in proportion to the drop in your home price, then your tax rate goes up, and you are being taxed more steeply than before. In other words, your wealth, as measured by the market value of your property, is being taxed at a higher rate than before. This is bad because you're paying more tax, in proportion to your wealth, than before. Also, if you sell your house, your house will be less attractive to a buyer than a similarly valued house in a jurisdiction with a lower tax rate. Tax rate is also a measure of how steeply your municipality is charging taxpayers for its services. Perhaps the worst thing about increasing tax rates when property values fall is that it is tempting for municipalities to maintain the higher tax rate even after property values rise again. When this happens, your tax bill will increase in proportion to the increase in your property value at the same time that the municipality is (correctly) saying, “We're not increasing the tax rate.”
“By Your Reasoning, Property Tax Bills Should Have Doubled From 2000 to 2009”
That's right! Or almost right. It's really 2008 when home prices stopped increasing, so let's go with that. And there are some technical issues with fairly comparing taxes before 2001, so let's look at the interval 2001 to 2008:
Doubling of property tax bills is exactly what has happened in some municipalities from 2001 to 2008. For example, my report, The Big Three Fire Districts of Dutchess County, shows that in the Arlington Fire District, the LaGrange Fire District, and the Fairview Fire District, taxable market values more than doubled from 2001 to 2008, but the tax rates in each of these districts stayed very close to constant during this period. This implies that the tax levy (roughly proportional to tax bills) has doubled during this period. See my report for detailed charts of market value, tax levy, and tax rates for each of these fire districts for this decade.
Admittedly, the Town of Hyde Park has not followed this pattern. Although property values have doubled there from 2001 to 2008, as they have in most jurisdictions in Dutchess County, the Hyde Park tax rate as shown here has actually decreased quite substantially during this period. Therefore, Hyde Park's tax levy has only increased 31 percent from 2001 to 2008, rather than doubling. In my view, this is actually a pretty good record. (For what it's worth, the records for the Town of Pleasant Valley, the Town of Beekman, and the Beekman Fire District are similar to that of Hyde Park.)
In summary, doubling of tax bills has occurred in the high-priced fire districts, but not in the three towns I've looked at in detail. Thus, the record is mixed.
“Municipalities Control Expenditures and Assessments, Not Market Value”
A interesting observation, but only two-thirds right! Obviously, municipalities control expenditures (to the extent they can be controlled, what with mandates, union agreements, and many other “locked in” costs). And obviously, municipalities do not control market values. But a municipality does not “control” assessments, not as long as the Town Assessor lives up to his/her oath of office. According to New York State Real Property Tax Law, assessors are sworn to assess properties in such a way that every assessed value divided by the Town's equalization rate is equal to the market value of that property. The assessor gets to set the equalization rate for the Town, but has precious little leeway in doing so. In fact, if the State thinks the assessor's equalization rate is “wrong,” it will overrule the Town and set the equalization rate to what the State thinks it should be. The rules for assessing individual properties are quite elaborate, and leave only a small amount of leeway to the assessor. It is more accurate to say that the assessor administers the assessment process, rather than “controlling” assessments.
At least that's the theory. Obviously, in the real world there are all kinds of inaccuracies, errors, delays, mistakes, and disputes, many of which are only settled in court. But the basic principle of how assessments work is simple, fair, and fundamentally driven by market values. In summary, the only way a municipality has for controlling the tax rate is by setting the tax levy, which is primarily controlled by expenditures.
I hope I've shed some light on the matters raised by the anonymous poster. I encourage others (or the same poster!) to post comments that can further the discussion.
Posts
The charts regarding market value are confusing to almost all readers because they do not present an accurate picture of market values. From the text I gather that Mr. Rubin arrived at the market value calculation for the Town of Hyde Park by taking the total taxable assessed value and dividing it by the equalization rate to get the "Total Market Value" for the Town. Such a calcuation is incorrect because it fails to address tax exemptions that are applied to properties.
ReplyDeleteThe taxable assessed value in the Town of Hyde Park for 2011 is approximately $921.6 Million. Dividing this number by the equalization rate of 56% yields a equalized value of $1,645,625,000. The Assessor's Report showing the impact of tax exemptions attached to the budget shows that the Equalized Total Asssessed Value for the Town of Hyde Park is $2,183,559,904. Mr. Rubin's chart entitled "Town of Hyde Park Market Value" shows the Equalized Total Assessed Value to be about $1.7 Billion Dollars which is roughly equivalent to the $1.645 calculation shown above. The equalized value of property tax exemption in the Town of Hyde Park for 2011 is $464,007,417. In percentage terms, 21.2% of the "Market Value" of the Town of Hyde Park is tax exempt property. Using the Full Market Value for the Town, as determined by the assesor yields a tax rate of $2.056 per thousand dollars of market value, not the $2.92 suggested by Mr. Rubin.
Mr. Rubin asserts that assessed values are meaningless and market value is all that matters. Nothing can be further from the truth. The assessed value of the property takes all exemptions into account. In the case of Hyde Park,and most other municipalities, they are substantial. For the Town tax, veteran exemptions, senior citizen exemptions, agricultural exemptions and others play a major role in shifting around the tax burdens of the Town. The STAR exemption is extremely important when determining the impact of the school tax levy.
Mr. Rubin's calculations on change in tax rate do not take into account the year over year change in the market value based on changes in exemptions.
Property taxes are apportioned among the properties in the Town on the basis of assessed valuation, not on market value. Because of that fact it is extremely important for property owners to review their property assessments and file tax grievances when they do not accurately reflect the market value, exemptions or other factors that relate to the property.
Property tax rates are not like income tax rates. Property tax rates are calcualted annually based on the tax levy and apportioned amongst the properties of the Town by the taxable assessed value of each property. Income taxes are calculated based on the taxpayers income; there is no apportionment. Property tax rates change year to year based on the amount the municipality needs to raise. The tax levy is not determined by the market value of the properties. I believe that Mr. Rubin knows that, but an uninformed reader may reach that conclusion based on the statements made.
It should be noted that unlike your mortgage or your heating bill, your tax bill would automatically go down if your market value decreased and the tax rate remained the same. Because the tax bill is apportioned by market value, through the assessed value, when property values are declining, the tax rate must increase simply to keep the amount of tax raised the same.
(***Please note, I believe that a municipality has an obligation to ALWAYS keep its expenses to a minimum whether property values are rising or falling. It is the taxpayers money, not the municipality's. The Town Board has a fiduciary obligation to the taxpayer to manage the tax levy wisely. Likewise, the taxpayer has an obligation to be informed, participate in government and encourage the Town Board to keep expenses and taxes low.)
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Posting of the above anonymous comment was delayed for two days because Google Blogger software -- without my knowledge -- had automatically marked the comment as SPAM! Once I realized the problem, I was able to get it posted. Looks like Google's spam filter isn't too smart. My apologies to anonymous for the delay.
ReplyDeleteI'll respond separately to the content of this anonymous comment.
@anonymous: First, one important clarification: When discussing market values in the context of tax rates, it only makes sense to talk about taxable market value, not total market value. Total market value includes both taxable market value and exempt market value. So my chart “Town of Hyde Park Market Value” is indeed for taxable market value only. As anonymous says, this data was calculated by dividing the taxable assessed value by the equalization rate. Similarly, tax rate is in units of dollars per thousand dollars of taxable market value, not total market value. Perhaps this point was confusing.
ReplyDeleteSecond, anonymous’ figures don’t seem quite right. He (or she) claims Hyde Park’s taxable assessed value is $921.6 billion, and that the equalization rate is 56 percent. But the first page of Hyde Park’s adopted budget shows the taxable assessed value of Hyde Park to be $928.6 billion. And Hyde Park’s equalization rate, easily obtainable from NYS ORPS website, is 54 percent. His inaccuracies partially cancel each other out, so he arrives at a total taxable market value for Hyde Park (“equalized value”) not too far from my $1.72 billion.
As far as I can tell, the main claim of anonymous is that my calculation of tax rates is flawed because it does not properly take into account tax exemptions. I disagree. Most properties are entirely taxable (residences, for-profit businesses, etc.), or entirely tax exempt (churches, schools, government buildings). If your property is entirely taxable, you’ll be paying tax at the rate I calculate. If your property is entirely tax exempt, you’ll be paying, well, nothing.
As anonymous says, some tax exemptions apply to only part of a property (veteran’s exemptions, agricultural exemptions, condo exemptions, etc.). If your property is one of those, you’ll be paying tax at the rate I calculate on the taxable portion, and nothing on the exempt portion. Yes, you could view that as like having a lower tax rate, but partially exempt properties would have many different tax rates in that case. The $2.056 tax rate computed by anonymous from the “full market value” is not meaningful in this discussion; it is not a tax rate at which anyone pays taxes.
In summary, my tax rates describe how steeply taxes are assessed on fully-taxable properties, and they describe how steeply taxes are assessed on the taxable portion of partially exempt properties. Since the calculations start with taxable assessed value – not total assessed value – the exemptions have already been subtracted out.
Mr. Rubin states:
ReplyDelete"As far as I can tell, the main claim of anonymous is that my calculation of tax rates is flawed because it does not properly take into account tax exemptions. I disagree. Most properties are entirely taxable (residences, for-profit businesses, etc.), or entirely tax exempt (churches, schools, government buildings). If your property is entirely taxable, you’ll be paying tax at the rate I calculate. If your property is entirely tax exempt, you’ll be paying, well, nothing."
Mr. Rubin fails to look at the actual numbers presented. The 2009 Tax roll had 1724 exempt properties out of a total of 7890 parcels. That is 21.8% of the parcels with a tax exemption of some sort. Certainly not an insignificant percentage.
There are 1,721 exempt parcels in the Town of Hyde Park for the 2010 tax roll. On the 2010 tax roll, 1483 parcels have partial tax exemptions and only 238 have full exemptions. So Mr. Rubin is absolutely incorrect when he says that most properties are either entirely taxable or non-taxable. One property owned by the railroad has a 34.336 partial tax exemption. Roughly 19% of the parcels in the Town of Hyde Park have partial tax exemptions.
"If your property is one of those, you’ll be paying tax at the rate I calculate on the taxable portion, and nothing on the exempt portion. Yes, you could view that as like having a lower tax rate, but partially exempt properties would have many different tax rates in that case."
The tax exemptions are applied to the assessed value, not the market value and the tax exemption varies by type. How is the average homeowner supposed to calculate what his tax would be based on the market value, when the exemption is calculated on the assessed value? It is impossible to apply the rate Mr. Rubin calculated to partially exempt properties, since the tax exempt portion of the property has already been included into his rate. Multiplying his rate to the taxable portion would lead to an incorrect result.
"The $2.056 tax rate computed by anonymous from the “full market value” is not meaningful in this discussion; it is not a tax rate at which anyone pays taxes."
It should be noted that the rate Mr. Rubin has calculated is not a rate that anyone pays either. It does not show up on any tax bill. Mr. Rubin has just defeated his own argument.
Mr. Rubin fails to see that the so called Market Value Rate that he has calculated is related to three independent variables: the change in the tax levy, the change in tax exemptions and the change in market value. When properties are added to or taken off the tax rolls, or tax exemptions are increased or decreased, this has an effect on the imputed tax rate. Blending the three variables together, as Mr. Rubin does, clouds the true budget issues.
When reviewing municipal budgets, the most important item to look at is the change in expenditures year over year. That gives the best picture of how a municipality is doing. A better index than Mr. Rubin’s calculated rate would be the change in expenditures as a fraction of the Equalized Total Assessed Value of the Town.
The next important item to look at is unallocated fund balances. When municipalities have large unallocated fund balances it means that prior year tax rates probably were too high. Large unallocated fund balances means that the municipality is taking the taxpayers hard earned money and parking it in their bank account for use at a later date. A reasonable amount of unallocated fund balance is prudent. Budget contingencies and reserves for future capital projects are also fiscally prudent. It should be noted that most municipalities do not adequately establish capital reserves, Hyde Park included.
Please read the next post that describes the mechanics of imposing the property tax.
I would suspect that the average reader is not familiar with how his or her Town/County property tax is set. A brief outline is presented. The Town or County adopts a budget. This budget includes revenues and expenses, similar to the budget for a business. A Town has to balance its budget so its expenses must equal its revenues plus the amount of existing fund balance that will be applied to that fiscal year. A large portion of the Town’s revenues is the amount that needs to be raised by the property tax. This is called the Tax Levy. The tax levy is calculated by taking the appropriations for expenses, subtracting the non-tax revenues and the applied fund balance. Using the Hyde Park FY 2011 Budget as an example: Appropriations $7,924,334.97 LESS Estimated Non Tax Revenues $2,960,1953.53 LESS Fund Balance $474,018.83 EQUALS Amount to be Raised by Property Taxes (TAX LEVY) $4,490,122.61.
ReplyDeleteThe Tax Levy is the amount of money the Town needs from its taxpayers to operate for the upcoming fiscal year. In December after the budget is adopted, the Town sends the tax levy amount to the County Legislature for its approval. The County may then add certain surcharges to the Town tax levy. The Town does not send any tax rates to the County. The tax rates are calculated by the County by using the tax levy and the tax roll.
In July, the Tax Roll for upcoming year for the Town is finalized after any tax grievances were resolved. It is important to note that the tax roll and the budget are adopted at different times and by different parties. The Town Assessor and the Board of Assessment Review set the tax rolls while the Town Board sets the budget. As noted in the prior post, the tax roll can change because of changes to market values, changes in assessments, changes in exemptions, addition of new tax parcels and changes in equalization rates. The roll changes from year to year, for reasons other than changes in market value. The major flaw in Mr. Rubin’s calculations is that he fails to take those changes into account.
The reader must take note that the Town property tax is not like an income tax. The Town Tax is apportioned among all the properties in the Town based on the assessed values shown on the tax roll. Apportionment means that the tax generated is a fixed number that is divided among all the properties using the tax roll. In Hyde Park the tax rate, given in dollars per $1,000 of assessed value is calculated by dividing the tax levy by the total taxable assessed value. The so called imputed tax rate for Fiscal Year 2011 is $4.83562 per $1000 of assessed value. (The calculation in the Town of Poughkeepsie is more complicated because it has Homestead and Non-Homestead Rates.)
A property tax levy is arrived at differently from an income tax. For an income tax, there is no set levy. The taxing entity sets a tax rate on income earned, with certain deductions and exemptions, and the tax generated can fluctuate based on the income earned. A property tax levy does not vary.
I know that Mr. Rubin well understands the concept of apportionment but the average reader may not. The average reader may incorrectly gather that the property is determined by the market value of one’s property and not by the tax levy. The tax levy is independent of the market value of properties in the Town. A Town is generally free to raise or lower its tax levy regardless of what happens to the market value of real estate. Market values only come into play when determining how the tax levy is to be divided among the various properties within the Town.
I agree with Mr. Rubin that in this day and age, it is more appropriate for a Town to have a 100% equalization rate. This is challenging in times of rapidly changing market values but it can be done. As Mr. Rubin correctly points out, the equalization rate to be used with the FY 2011 budget is 54%. That means that for comparison purposes the tax rate of $4.83562 per $1000 of assessed value would be equal to $2.61123 per $1000 of assessed value in a jurisdiction that has an equalization rate of 100%. It is important to compare tax rates from municipality to municipality on an apples to apples basis.
ReplyDeleteAs a final note, certain water and sewer districts in the Town of Hyde Park raise revenue through assessments calculated on a benefit basis. In those districts, the benefit assessments are typically the same for single family residences regardless of property value. The tax levy for the water and sewer districts are calculated using the method above but it is apportioned using the benefit assessment roll rather than the tax roll. Market Value has no bearing in those calculations at all. It is not clear to me how Mr. Rubin would treat those tax levies.
Once again, Google Blogger software has marked some comments as spam, requiring me to release them for posting. I've also deleted two comments that appeared to be duplicates. Sorry for the inconvenience. Unfortunately, operation of Google's brain-dead spam filter is out of my control.
ReplyDeleteI'll respond separately to the content of these comments.
@anonymous: “So Mr. Rubin is absolutely incorrect when he says that most properties are either entirely taxable or non-taxable.”
ReplyDeleteYou write, “Roughly 19% of the parcels in the Town of Hyde Park have partial tax exemptions.” So 81 percent are either entirely taxable or non-taxable, right? Isn’t 81 percent “most properties”? It looks to me like you’re saying I’m correct.
But regardless of all this, I still don’t see your point about how tax exemptions cause a problem for my tax rate analysis. As I see it, the tax exempt portion of a municipality simply does not participate in tax rate considerations.
“It should be noted that the rate Mr. Rubin has calculated is not a rate that anyone pays either. It does not show up on any tax bill. Mr. Rubin has just defeated his own argument.”
This statement is exactly wrong. The tax rate in dollars per thousand dollars of (taxable) market value is the rate that everyone pays. And it does show up on most tax bills. It’s in the “Rates per $1000 or per Units” column of your tax bill. The only tax bills that do not show these rates explicitly are those in the few legacy Towns (like Hyde Park) which haven’t yet modernized their assessment records to 100 percent equalization rate. In the legacy Towns, you can calculate the tax rate in dollars per thousand dollars of market value by multiplying the rate from the “Rates per $1000 or per Units” column by the equalization rate – which also appears on your tax bill. Just to obscure matters, the tax bill refers to the equalization rate as the “Uniform Percentage of Value”. I encourage you to do this with Hyde Park tax bills for the last decade, and see how the Town tax rates agree with the chart in my November 11 blog post.
“The Town does not send any tax rates to the County. The tax rates are calculated by the County by using the tax levy and the tax roll.”
This is technically true, but irrelevant. The Town has essentially complete control over the Town tax rate (if anyone does!). The Town begins its budget deliberations after the tax roll has been finalized on July 1. That way, the Town knows the exact market value of its tax base, and can determine the exact tax rate corresponding to any proposed tax levy. It is true that there are few technicalities which can change the final tax rate slightly, typically adjusting it by only a few cents. (Example: The County fronts the Town for the value of delinquent taxes. It recovers that money the next year by adding a surcharge to the tax levy.)
“As noted in the prior post, the tax roll can change because of changes to market values, changes in assessments, changes in exemptions, addition of new tax parcels and changes in equalization rates. The roll changes from year to year, for reasons other than changes in market value. The major flaw in Mr. Rubin’s calculations is that he fails to take those changes into account.”
My calculations do take these changes into account. The tax roll, once established for a given year, takes into account all the things you mentioned. It is this tax roll that determines the taxable assessed value of the town. A reader of your post might think that the taxable assessed value of a town is set after the budget and tax levy have been determined, but the exact opposite is true. The tax roll is finalized on July 1 before the budget process begins in earnest. That way, the town knows its tax base, and can determine exactly how much tax it can levy to hold the tax rate increase to a given percentage.
I suggest that people who are interested in the real property tax system check out the NYS Office of Real Property Tax Services web site. There is a wealth of information found there. I would particularly recommend the following link which discusses the present issue. http://www.orps.state.ny.us/pamphlet/taxbrgts.htm
ReplyDeleteORPTS has the following comment regarding the real property tax process.
"Have Taxes Increased This Year?
Your individual tax bill is based on two primary factors:
your taxable assessed value (assessed value minus any exemptions),
the amount of taxes being collected by the taxing jurisdiction(s) - school district, town, county, city and/or special district.
Changes in your assessment may result in your bill increasing or decreasing, but the amount you pay will also be affected by the amounts being collected by the taxing jurisdictions - also known as the tax levy. To determine whether the taxing jurisdiction is collecting more or less in taxes compared to last year, you can look at the Total Tax Levy and the % Change from Prior Year.
Your tax bill also has the tax rates for each taxing jurisdiction. Changes in the tax rate between years are not accurate barometers of changes in the amount of taxes being collected. (For example, if assessments have increased, the tax rate can remain the same and the taxing jurisdiction can still collect more in taxes.)"
Please note that ORPTS specifically states that it is the change in the TAX LEVY that is germane, not the change in the rate.
Municipalities determine the overall tax levy based on its financial needs. Municipalities typically do not look at the tax rate increase, they look at the percentage change in the tax levy from year to year. The change in tax levy from year to year is an apples to apples comparison; the change in rate from year to year is not because the levy changes as does the total taxable assessed value for the Town.
As ORPTS says, Tax rate X taxable assessed value = tax amount. Taxable assessed value is assessed value minus any exemptions.Please note that ORPTS discusses assessed value, not market value.
I have not suggested that the Town does not "control" the tax rate. What I have said is that the Town sends up a tax levy number and the tax levy is then apportioned using the tax roll. The tax rate is merely a by product.
ORPTS correctly points out "Changes in the tax rate between years are not accurate barometers of changes in the amount of taxes being collected." ORPTS points out that changes in rate are not accurate barometers because the tax rate base may have changed. That is my point.
Mr. Rubin's fixation on the change in rate misses the fact that a change in tax rate (assessed or full market) is influenced by two factors: change in levy and change in rate base. If you don't look at each factor separately you don't get an accurate picture. As ORPTS points out there may be no change in your tax rate year over year, but if you assessed value changes you may have an increase or decrease in the taxes paid.
The discussion is about changes from year to year, not within a single year.
The Town of Poughkeepsie is a much more complicated animal because POK has a homestead tax provision. In POK homestead and non-homestead parcels have different rates even if the full market value is the same.
@anonymous: I heartily agree that the NYS ORPS website is an excellent resource for basic information on how real property taxes work in New York State. Information on this website is authoritative, and is carefully worded to be factually correct. The particular web page you reference is entitled, “Understanding Your Property Tax Bill”. You quote a number of factually correct statements from this page, and imply that they somehow contradict my claim that tax rate and change in tax rate is of central importance. As I see it, none of the statements on the ORPS website conflict with my claims.
ReplyDeleteFor example, “Changes in the tax rate between years are not accurate barometers of changes in the amount of taxes being collected.” This factually correct statement is another way of saying that changes in the amount of taxes being collected are not accurate barometers of changes in the tax rate between years.
A lot depends upon one’s viewpoint. The web page you reference assumes, “Most of us just want to know what we owe in taxes.” Well, if all you want to know is how much money you owe in taxes, and how that compares with last year, then, yes, tax rates are unimportant. Similarly, if the Hyde Park government only looks at the tax levy, and at how that compares with last year’s tax levy, then, yes, tax rates are unimportant. In my view, taxpayers and towns with such an attitude are very short sighted. So are taxpayers *in* towns with such an attitude.
You say, “Municipalities determine the overall tax levy based on its financial needs. Municipalities typically do not look at the tax rate increase, they look at the percentage change in the tax levy from year to year.”
That’s like an individual saying, “I charge purchases to my credit card based on my financial need. I don’t look at my earning power, I just look at my percentage change in spending from year to year.” I call this “flying blind”. The credit card company calls this “a good customer”. Taxpayers call this an out-of-control government.
“Mr. Rubin's fixation on the change in rate misses the fact that a change in tax rate (assessed or full market) is influenced by two factors: change in levy and change in rate base. If you don't look at each factor separately you don't get an accurate picture.”
Once again, you’re saying, in a backwards sort of way, what I’m saying. My “fixation” on the change in tax rate doesn’t *miss* the fact – it *exploits* the fact. The whole point of “fixating” on the change in the tax rate is that it takes into account both the change in the tax levy and the change in the tax base. Looking at each factor separately obscures the big picture.
Mr. Rubin states:
ReplyDelete“A lot depends upon one’s viewpoint. The web page you reference assumes, “Most of us just want to know what we owe in taxes.” Well, if all you want to know is how much money you owe in taxes, and how that compares with last year, then, yes, tax rates are unimportant. Similarly, if the Hyde Park government only looks at the tax levy, and at how that compares with last year’s tax levy, then, yes, tax rates are unimportant. In my view, taxpayers and towns with such an attitude are very short sighted. So are taxpayers *in* towns with such an attitude.”
Based on the majority of comments posted on your blog it seems that most people just want to know how much money they will owe in taxes when their tax bill comes in the mail. Take for example a comment by Dutchess Preserver
DutchessPreserver said...
To me it is just a shell game. No Ones wants those who will be paying to know the real story until the bill comes in January.
The question on most people’s minds during the budget adoption process is “How much will my tax BILL go up next year?” The average person is not asking: “How much has my tax bill increased as a percentage of the taxable fair market value of my property, after suitably correcting for changes in assessed value and equalization rate but not including exemptions that I may have?” The average person is short sighted. The average taxpayer is probably not selling their home anytime soon and is less concerned about changes in market value. Granted, we are all aware of the drop in the market. Unless someone has recently bought their home, tried to sell their home, or recently refinanced and had an appraisal done, I would suspect that they don’t have a good handle on what the actual fair market value of their house is.
Since the average person is unlikely to know the change in the fair market value of their house, the data crunched by Mr. Rubin is merely an academic exercise. Mr. Rubin’s data doesn’t give the average taxpayer the answer to the question, “How much will I be paying in taxes in the upcoming year?”
I commend Mr. Rubin on conducting a fine academic exercise, but I castigate him for the tone of his posts. His calculations do not give the average taxpayer in Hyde Park a useful tool to see how much his tax bill will be.
I pretty much agree with the above anonymous comment, except for the part about my work being only an academic exercise. It’s probably true that most people only care about how many dollars they’re shelling out this year in property taxes, rather than how those dollars compare with the number of dollars they’d get if they sold their property. These same people probably only care about the amount of their monthly car payment, rather the interest rate they’re being charged on their auto loan. Some of these people, in the last few years, walked away from their homes after they became worth less than their mortgage balance.
ReplyDeleteIt’s a wild guess, but I’m thinking that most of these people probably don’t read my blog. These people might be able to muddle through their personal finances without going bankrupt, but you wouldn’t want them running a government. It’s one thing when less sophisticated taxpayers ignore the fiscal facts of life, but quite another when government officials do so, as has been the case in the Towns of Hyde Park and Pleasant Valley. The fiscal actions of government affect all taxpayers, not just the short-sighted ones. My blog attempts to serve government officials, policy wonks, and the more informed property taxpayers.