538.com thinks your definition of Austin might be foolish (Round Rock: 2014, renters)

[Aquitaine]

Our renters most certainly don't pay taxes. The literal transfer of their dollars to the landlord's tax payment does not a tax payer make for several reasons:

- they can leave when their lease is up
- they aren't tied to the property in a manner that gives them a strong interest in whether values go up or down (they certainly have some interest, though)
- they don't think of themselves as taxpayers; rent is rent
- they don't have a pony in the race. There's no buy-in.

Particularly with multifamily units, even the payment aspect is so diffuse as to be meaningless. "Renters pay property tax" is a tired old argument through which some of your urban core types can't stand non-urban core types having more of a stake in something than they do.

[gpurcell]

Renters do not pay property taxes. Rent is purely dependent on supply and demand of housing and is not some combination of "cover taxes + extra for the landlord".

[Novacek]

Originally Posted by gpurcell

Renters do not pay property taxes. Rent is purely dependent on supply and demand of housing and is not some combination of "cover taxes + extra for the landlord".

So obviously Austin could double, triple property taxes on rental properties and that would have absolutely no effect on rent rates.

Hey, free money. That solves everything.

<sarcasm>

[Aquitaine]

So obviously Austin could double, triple property taxes on rental properties

Posts like these are like a bible of logical fallacies.

Reductio ad absurdum - look it up.

[verybadgnome]

Landlords don't eat costs but rather past them on. Renters pay property taxes indirectly and at a higher rate, i.e. no 10% caps since no homestead.

If there are no renters then there will be no properties for them and the taxing jurisdictions would only assess the land values.

What is ironic about this conversation is that many will refer to the burdens of regulations as de facto taxes but not recognize the link between property taxes and rents.

[Aquitaine]

Landlords don't eat costs but rather past them on.

Of course, but they are constrained by the market like any business.

It isn't rocket science. Of course there is a correlation between rent and property tax. But it is like you say: indirect. Renters are not taxpayers. They don't care or know about appraised values and they don't write checks to the tax man. Chances are they have no idea how much the property tax for their dwelling is. They aren't going to be informed voters whenever property tax is the payment mechanism because they perceive that somebody else is paying the price for a benefit that they will receive. I think that's what most people mean when they refer to renters: you are ultimately paying at least a share of the cost, but you don't think you are and you don't know what that share is.

Their interest in the process isn't zero, but it isn't what I'd call a stakeholder. And even then, not all renters are the same. Your single family unit renter that is saving up for their own place is going to be more plugged into the system than a college student.

[CptnRn]

Originally Posted by gpurcell

Renters do not pay property taxes. Rent is purely dependent on supply and demand of housing and is not some combination of "cover taxes + extra for the landlord".

Well obviously no landlord will stay in business long if they were not able to cover their costs and expenses. So that rule does establish the minimum rent price that will be asked.

Some landlords do not always raise the rent as much as they can when market rents go up, because they prefer to keep a good tenant who has been with them for several years. On the other hand some corporate landlords will raise the rent as high as the market will bear, they are in the business of making money. This is especially true in large apartment complexes.

[verybadgnome]

Originally Posted by Aquitaine

Of course, but they are constrained by the market like any business.

It isn't rocket science. Of course there is a correlation between rent and property tax. But it is like you say: indirect. Renters are not taxpayers. They don't care or know about appraised values and they don't write checks to the tax man. Chances are they have no idea how much the property tax for their dwelling is. They aren't going to be informed voters whenever property tax is the payment mechanism because they perceive that somebody else is paying the price for a benefit that they will receive. I think that's what most people mean when they refer to renters: you are ultimately paying at least a share of the cost, but you don't think you are and you don't know what that share is.

Their interest in the process isn't zero, but it isn't what I'd call a stakeholder. And even then, not all renters are the same. Your single family unit renter that is saving up for their own place is going to be more plugged into the system than a college student.

And most drivers don't know what they are paying in state and federal gas taxes. Same difference?
Technically most homeowners don't make direct payments to the taxing authority as escrow is the norm.

Honestly your line of thinking is what the founding founders had in mind when they said that only land owners could vote. Despite their being deified they were wrong!

We have many long term renters in Austin, as a matter of fact Austin is a majority renter city.

With rents going up the past few years if renters don't know that a good chunk of that is from property taxes then here is an announcement that it is!

[sojourner77]

Originally Posted by Novacek

So obviously Austin could double, triple property taxes on rental properties and that would have absolutely no effect on rent rates.

Hey, free money. That solves everything.

<sarcasm>

That's a great idea. The city could filter out all the property owners that have secondary mortgages paying 7%+ interest already, then tax them even more. The paperwork would be huge, sure - but that's okay because the city could hire an entire department of people to sort out the mess, then we could raise property taxes to pay for these new city employees, or maybe just use the taxes we already raised on the rental properties. Fabulous!!!



<sarcasm>

[Aquitaine]

Honestly your line of thinking is what the founding founders had in mind when they said that only land owners could vote.

I'm not suggesting that folks who don't pay property taxes should not be entitled to vote on them. I am simply observing that your typical renter does not have a real sense of their impact. Just like college students don't have a real sense of how much their tuition is (or was) until after they graduate and the loans come due. And then they've even seen the numbers - they just don't have real meaning. It's a use case of a general rule of economics in life: you may 'know' how much something is but you don't really 'get it' until you've had to pay it. Sure there are exceptions but that's most people, myself included.

as a matter of fact Austin is a majority renter city.

I had never heard that this was true and it does not appear to be true: Residential Rent Statistics for Austin Texas | Department of Numbers

I don't know that it matters; Austin has a lot of renters and would even if it weren't for UT. Again, I think you're imagining a conclusion here that I'm not suggesting. I was a renter for fifteen years of my life - far longer than I've been a homeowner or a landlord. I don't want to marginalize them or disenfranchise them. If their place in life means that I may disagree with their politics because their sense of economic reality is incomplete, that's fine.

With rents going up the past few years if renters don't know that a good chunk of that is from property taxes

Rents went up because demand went up. Appraisals went up because demand went up. Taxes went up because appraisals went up. The market outpaces TCAD appraisals in most areas due to TX being a non-disclosure state and exemptions, so as a general statement, 'taxes as a share of rent have not gone up as fast as market rent has' would be how I'd put it.

And most drivers don't know what they are paying in state and federal gas taxes. Same difference?

Most folks may not be able to say what their gas taxes are, but they perceive that it will hit them directly. There are too many things removing the renter from a property tax increase: lag time for one since the tax increase has to pass and then be reflected in next year's appraisal, and their lease for another, since even if my rental property's taxes go up, that doesn't necessarily mean that the market will support a rent increase. If I jack up the rent by $100 but it results in the house being vacant for an extra two weeks, I'm out a lot more than $100 in lost rent; and as others have pointed out, there is considerable value in keeping good tenants rather than recovering ever dollar, so we can assume that landlords will pass on costs when other factors permit, but they will also absorb increases when they don't. All of that comes out to a very indirect relationship between tax hixes and rent.