High property taxes?! (Dallas, Richardson, Coppell: sales, lease, insurance)

[thezone]

All -

Have a general question on property taxes + ISD taxes.

Why is it almost 2.5-3% in various cities in DFW where as it is not more than 1.25% in NJ. (approx).

Note - I'm not trying to start a geographical or political discussion, rather trying to understand.

Thanks for your replies.

Thanks

[Spree]

Texas does not have a state income tax whereas NJ does?

We also have a high sales tax in Dallas - 8.25%, what is it in NJ?

[thezone]

Spree - NJ state sales tax is 7%

Yes, NJ does have a state income tax. But the city wont get it - right?

Thanks

[EDS_]

New Jersey has the 2nd highest overall tax burden imposed by any state - 12.4% IIRC. Texas is 6th lowest. There's no comparison.

[GBCommenter]

I don't know NJ law in regards to how the income tax might "trickle down" to cities, but in my home state of MN there is what is called "LGA" (Local Government Aid). My understanding is, therotically, taxes are paid to the state and part of that is given to local governments to spend on projects cities could not otherwise afford on purely their own local property taxes. The City of Minneapolis justifies their "take" by saying they are expected to bear the burden of services to visitors of the city that are not property tax paying residents (in other words, a suburbanite takes advantage of Minneapolis police services and city roads without paying Minneapolis property taxes). Some would say it it is effectively a form of redistribution. Also, depending on the political savvy and/or connections in St. Paul (capital of MN) of a particular community, some probably get more than their "fair share". In any case, my guess is something similar happens elsewhere and how state income taxes eventually roll down to cities.

That said, EDS is right on the overall tax question. While Texas property taxes are high along with sales tax (plus, as I have discovered all too well since calling TX home, the toll roads), overall taxes are less of a bite than in NJ or my home state of MN...hence part of the reason I call TX home today.

[thezone]

Hello GBCommenter - thanks for the detailed reply.

[Rakin]

Property taxes IMO are much more equitable. Many people get out of paying Income taxes but everyone pays property taxes.

Even if you lease, it's figured in the amount you pay to your landlord.

[TX75007]

Property taxes are electively regressive but have an equitable base.

Everyone pays, but some people can choose to pay more.

Texas also protects legacy landowners from speculation by having a farm/open space exemption and then a rollback tax imposed on developers who buy the land for development.

The other nice thing about a property tax only system is that the tax base is the same from year to year. It forces the state to budget better.

[Pretzelogik]

Originally Posted by thezone

All -

Have a general question on property taxes + ISD taxes.

Why is it almost 2.5-3% in various cities in DFW where as it is not more than 1.25% in NJ. (approx).

Note - I'm not trying to start a geographical or political discussion, rather trying to understand.

Thanks for your replies.

Thanks

How do you spell no state income tax in Texas.

[TurtleCreek80]

Originally Posted by Rakin

Property taxes IMO are much more equitable. Many people get out of paying Income taxes but everyone pays property taxes.

Even if you lease, it's figured in the amount you pay to your landlord.

But property taxes are controllable while income taxes are less so. Someone making $100k a year is going to have roughly the same income tax anywhere they live (whether federal taxes or income taxes in different cities of an income tax state). However- that person can decide or buy a $100k house with a $2000ish annual property tax burden or a $300k house with a $6000ish annual tax burden. That's easily $3k back in their pocket (accounting for the loss of $1k in itemized deductions on the additional $4k of property taxes).

I've always said Texas is a dream destination for super high-earners. Take a C-suiter with a $400-500k income living in New York. S/he is currently paying around $45-50k per year in NY state and NYC city income tax. Let's also say s/he lives in Westchester County in an "average" $850k home in a great school district. That home is a
3/2.5 with 2250sf. Pretty typical. Westchester property taxes are also pretty high. If this person relos to DFW and can manage to only slightly upgrade standard of living (ie, not get all goo-goo eyed at a 6,000sf home in Southlake or Starwood), s/he could either buy a comparable home in the Park Cities and save $45-50k in income taxes off the top, not to mention a moderate break on property taxes. Or they could pick Lake a Highlands or Coppell or Richardson - comprable "inner ring" suburbs to Westchester, except with a fraction of the commute- and buy a 3,000 sf-range home for half the cost of the NY home, pocketing another $15-20k per year in savings - both property taxes and mortgage/interest/insurance. Just moving to Dallas has increased this person' take-home pay by approx 25%. Wow!