Property taxes - Why so high? (Austin, Round Rock: neighborhood, buyers, go bankrupt)

[TexasHorseLady]

Originally Posted by love roses

Yeah, it wouldn't do me any good to live centrally because we'd just have a longer commute since neither of us work central. We'd get a reward for living central, but then it would be negated by the cost of a longer commute.

Yeah, annoying how it can't just be all black and white and simply solved, but insists on being complex, isn't it?

[jobert]

Originally Posted by love roses

Yeah, it wouldn't do me any good to live centrally because we'd just have a longer commute since neither of us work central. We'd get a reward for living central, but then it would be negated by the cost of a longer commute.

I was implying that centrally located houses are smaller. People living further out 9-times-out-of-10 will live in larger houses as a result. I have yet to see a 1000sf house in Round Rock, for example.

[jobert]

Originally Posted by Austin97

There is no such thing as "fair" when it comes to taxes. A percent of the value is much more "fair" to me. Why should living in a small centrally located house be rewarded?

operative word: "smaller"

Lower carbon footprint. Houses centrally located tend to be smaller.

[austin-steve]

Originally Posted by jobert

I was implying that centrally located houses are smaller. People living further out 9-times-out-of-10 will live in larger houses as a result. I have yet to see a 1000sf house in Round Rock, for example.

An aside that just occurred to me:

The smaller house prevents impulse buying of large, worthless consumer goods since the first question one would have to get past is "where would we put it?", "where are we going to park it?", or "what are we going to get rid of to make room for it?".

So, in a way, the smaller Central house imposes a level of frugality, at least with regard to personal possessions that must be kept on site, that theoretically reduces one's level of consumer consumption. That consumption savings would offset at least somewhat the higher taxes, as would the lower transportation costs.

Of course, being walking distance to so many eateries might cause one to eat out more, which isn't frugal, but the exercise obtained during the walk to and from increases your health and reduces your long term medical expenses.

Point is, there are so many cost variables that can be factored into the "Total Cost of Ownership" of a particular home and its location, that it's hard to simply assign labels such as "more expensive" to a specific home and its tax bill unless you factor in a complete assessment of the value and benefit one derives from the ancillary factors of living in that size home in that specific location.

Steve

[thesonofgray]

Originally Posted by austin-steve

Point is, there are so many cost variables that can be factored into the "Total Cost of Ownership" of a particular home and its location, that it's hard to simply assign labels such as "more expensive" to a specific home and its tax bill unless you factor in a complete assessment of the value and benefit one derives from the ancillary factors of living in that size home in that specific location.

Steve

Great point. And one that easily explains why relying heavily on property taxes is not a good thing. It has little to do with consumption or production, and is more often an arbitrary number assigned to value things that are not only intangible and extremely abstract but that also vary quite a bit in value between individuals.

I guess the benefits of income tax are presenting themselves as we dig deeper into this discussion.

[austin-steve]

Originally Posted by thesonofgray

Great point. And one that easily explains why relying heavily on property taxes is not a good thing. It has little to do with consumption or production, and is more often an arbitrary number assigned to value things that are not only intangible and extremely abstract but that also vary quite a bit in value between individuals.

I guess the benefits of income tax are presenting themselves as we dig deeper into this discussion.

I think the opposite could also be construed. There is not a more pure and accurate "value" than the one established between free buyers and sellers.

Central neighborhoods in Austin are in demand such that those more willing and able to pay higher prices win out over those less willing. The higher values, and resulting property tax revenue, keep the property tax rate lower than it would otherwise be in the working class areas since the burden is distributed more to the central locations.

Now, that might not be good for grandma living in Hyde Park, but her bill was frozen at age 62. My mom is 68 and pays less than 1/2 what I would pay in property taxes if I owned the same house, because the rate was frozen when my Dad turned 62 10 years ago.

Steve

[thesonofgray]

Originally Posted by jobert

I like your line of thinking - a "square footage tax" of sorts perhaps. You should be an advisor to Debra Medina, because that idea could gain a lot more traction than the abolition of property tax altogether as she had proposed. What would be fair...say $3/sf? Choosing to live in a small, centrally located house should be rewarded IMO.

Originally Posted by love roses

Yeah, it wouldn't do me any good to live centrally because we'd just have a longer commute since neither of us work central. We'd get a reward for living central, but then it would be negated by the cost of a longer commute.

It would be a very interesting experiment if such a thing was attempted - a sort of "resource tax" that actually distinguished between the necessary resources required to live different "lifestyles". Unfortunately, such things are so incredibly hard to measure and define. And where they can be measured and distinguished, it's almost impossibly complex to find some sort of aggregate of values. Even the most basic of consumption taxes fail to account for hidden societal costs because most often the markets don't factor in such things like pollution, municipal services, natural resources, land-use changes, and other costs that we all pay for (in a highly inequitable way) but without explicit knowledge of doing so or knowledge of how much (cap-and-trade, anyone?).

And what would such an experiment do to shape our built environment and how would it affect our daily lives?

It's all very interesting and very complex with no easy answers. I mean, seriously, if there was an easy answer, don't you all think we'd have found it by now?

[thesonofgray]

Originally Posted by austin-steve

I think the opposite could also be construed. There is not a more pure and accurate "value" than the one established between free buyers and sellers.

I know something more pure and accurate: income. (I promise I'm not a proponent of income taxes, but I realize all taxes have their benefits and weaknesses).

$10,000 of pay for work is going to equal $10,000 of value to every person using the US dollar. But I don't like the idea of "penalizing" productivity either, so it's all a wash.

Originally Posted by austin-steve

Central neighborhoods in Austin are in demand such that those more willing and able to pay higher prices win out over those less willing (and able). The higher values, and resulting property tax revenue, keep the property tax rate lower than it would otherwise be in the working class areas since the burden is distributed more to the central locations.

What does "keep the property tax rate lower than it would be otherwise" mean? You're assuming that we need to rely on property taxes for government revenue and that those property taxes must be a flat tax based on assessed value. I'm calling into question the validity of the "value" in the assessed value. Who's value is it? It's definitely not my value, and I'm sure it's not your value either. And I honestly don't think the real estate market is one that follows 'pure' unadulterated market principles.

[HappyTexan]

Originally Posted by jobert

I was implying that centrally located houses are smaller. People living further out 9-times-out-of-10 will live in larger houses as a result. I have yet to see a 1000sf house in Round Rock, for example.

Don't look in any of the newer areas further out..those are all big.
If you look at the downtowns and surrounding well established (40 years +) neighborhoods then you will find those smaller homes.

In those newer areas only the lots kept getting smaller while the homes kept getting bigger.

[austin-steve]

Originally Posted by thesonofgray

I know something more pure and accurate: income....$10,000 of pay for work is going to equal $10,000 of value to every person using the US dollar. But I don't like the idea of "penalizing" productivity either, so it's all a wash.

I assure you that $10K to someone who makes $30K per year is a lot different than to someone who makes $300K per year.

What does "keep the property tax rate lower than it would be otherwise" mean?

It means, if you think of property tax per square foot (since that has been discussed), that the young families in their twenties and thirties who want good schools and are willing to live further out get to have their property tax bill subsidized by people living central, most without kids. The Centralites pay 3x the amount per sqft in property taxes as do the families for whom the property tax most immediately benefits. The vast percentage of property tax revenue funds public education, not the government services you use.

You're assuming that we need to rely on property taxes for government revenue and that those property taxes must be a flat tax based on assessed value. I'm calling into question the validity of the "value" in the assessed value. Who's value is it? It's definately not my value, and I'm sure it's not your value either. And I honestly don't think the real estate market is one that follows 'pure' unadulterated market principles.

It's market value. What a willing home owner and willing home buyer are willing to exchange for a particular home, absent any undue influence or external pressure.

Steve