An interesting feature in the online New York Times shows you “What you get for $850,000″ or some other amount that seems, in a New York sense anyway, plausible for wealthy second-home buyers. Illustrations of these delicious-looking homes are accompanied by their taxes. A recent article listed taxes on an $850,000 home in Tennessee at $1,891; in Idaho, at $2,638; and in Arizona, at $2,332.
I own a rental home in Palmetto Beach for which I paid $60,000 seven years ago. Its taxes last year were $2,571.
Compare and contrast.
Lots of factors go into financing a home. But it’s indisputable that taxes and insurance (often based on the assessed value or “replacement value,”) will raise the monthly payment on this house by something around $300 per month. In other words, if I tried to sell my house, a prospective buyer would have to pay 37 percent more than its assessed value of about $120,000 for taxes and insurance.
I mention all this because late December news reports make it clear that purchase prices of homes in Tampa fell by around 11 percent last year, and are not expected to do much better this year. On the same page is news that in-migration growth into Florida has dropped for the first year in recent history.
At the risk of mistaking correlation for causation, I believe that the increased cost of housing in Tampa is a large factor in discouraging new residents.
In an area whose financial health is based on growth (overpowering tourism, agriculture, shipping and manufacturing), this is ominous news.
Yet, in Tallahassee, our lawmakers persist in tinkering with solutions – homeowners’ taxes, service taxes, etc. – that don’t even come close to confronting the actualities.
We cannot sustain an economy based on growth while penalizing citizens for choosing to move here.
We don’t need “better” taxes on property ownership – although it would help to tax “existing use” of property rather than an assessor’s fantasy about “highest and best use,” which is the current procedure.
Instead, we need a new basis for providing money for public use.
A friend of mine in the home furnishings business suggested recently that since sales taxes are proven to be regressive, an income tax might be the best solution. It was the first time I’d heard a bona fide Republican businessman say such a thing.
I was amazed to hear him say it.
This state has long been proud that our lack of income tax makes Florida a haven for high-profile citizens such as, say, Paul Bilzerian, O.J. Simpson and Kenneth Lay, among others.
Yet as our taxation system slowly guts the very foundation of what Florida has to sell – its land, its homes, and the consequent lifestyles – we are slowly but certainly injecting poison into the goose that lays the golden eggs.
Unless we’re willing and able to go into another line of work – snow-skiing? steel-making? wheat-growing? – Floridians must recognize that we’ve reached a tipping-point.
An income tax (something simple, like 1 percent levied and collected atop federal tax returns, would easily eclipse property tax collections) would have the beneficial effect of dismantling the entire stupid system of property assessment altogether.
http://www2.tbo.com/content/2008/jan/13/bz-an-income-tax-could-rescue-florida/
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