Tuesday, December 30, 2008

Question of the Day

My brother owns a home in Maryland. It is worth in the neighborhood of $700,000 and his property taxes are roughly $4,000 per year.

I own property in Racine. It was assessed at $478,000 and my tax bill was over $11,500.

The Maryland property has a tax rate of approximately $5.70 per $1,000 of property value while my tax rate was over $24 per $1,000 of value. Racine residents pay over four times the property tax than does my brother in Maryland.

Now my question for readers, especially liberals, is this: How do property tax rates affect property value and the behavior of property owners?


Anonymous said...

According to the 2009 WISTAX guide, Maryland residents per capita taxes are $4,627. and Wisconsin is $4,025. So, to just judge the property tax rate (which was shifted away from manufacturing in the 1970's so that Wisconsin would be competitive) can be deceiving.

Maryland's overall tax ranking is #8, while Wisconsin has slipped to #11.

So, Denis, I wonder what Maryland is doing right and Wisconsin is doing wrong when it comes to taxing their residents?

Denis Navratil said...

What Maryland is doing right is keeping their property tax rate reasonably low. This allows Maryland residents to invest in their properties without getting hammered by taxes. I am not the least bit versed in Maryland politics, but my guess is that they don't have to dream up increasingly implausible development schemes like we do here in order to stimulate development. The development will happen naturally because of a reasonable property tax rate. Anon, another way to look at the Maryland vs Wisconsin property tax rate is that, even though we pay roughly the same in property taxes, they have homes on average that are worth four times as much as ours. Lowering property taxes will increase the value of our property.

Anonymous said...

Hi Denis, Our rate in Wind Point is lower than most areas in SE Wisconsin. Franklin's is higher as is Kenosha's. However, we chose a much smaller, modest home than we wanted because the taxes are a punishment. Oregon has no sales tax, but property taxes are high. Washington has no income tax, (as I remember) but sales taxes are high. Our state's taxes are plain high. I'd say it causes people and business to stay away!

Denis Navratil said...

anon, thanks for your comments. I live in Wind Point also, in a smallish condo. You are right that people and businesses tend to stay away from high tax areas. For this reason perhaps, pols think its a good idea to raise property taxes, because you can't take a home out of state, so you are stuck paying whatever they demand of you. But what they fail to realize is that while the property remains, the value gradually leaves as people decide against upkeep and reinvestment. So you have a downward spiral in home prices and home quality. Isn't this what we are seeing in Racine?

Anonymous said...

So what?