Tax Bills are coming! (Good news?)
October 10, 2007
Could it be? Will homeowners actually be HAPPY to see their property tax bills this year?
I certainly hope that’s the case because when I knocked on over 3,000 doors in our community, SEVERAL residents mentioned their high property tax bills and the struggle they had to pay taxes.
We’re all about to soon see why the House Republicans stayed into the midnight hour one evening two years ago to fight for Property Tax Relief. (Note: My floor speech on the issue should be under the Video section on the website or watch it here.)
While there are always exceptions to everything in life, most residents (and in House District 71 - several thousand residents) will see not only a reduction in property tax bills this year, but also a net savings in their pocketbook.
Simply put here’s how it works:
* Let’s say your tax bill is $200 less this year. (That reduction right there “feels good”).
* If you pay less than $200 in extra sales tax this year on purchases, you came out ahead.
How much “stuff” would you have to purchase this year to pay $200 extra in sales tax (based off the 1% sales tax increase that was part of this legislation)? $20,000 of “stuff”. Think you’re going to do that?
That $20,000 of “stuff” does not even include groceries because actually the grocery tax went down with this bill AND….again in this past session we removed ALL GROCERY TAX.
See how this is actually true relief for homeowners?
This relief is targeted to primary residences only. If you have a second home - you won’t see the relief on that property. If you have rental properties - you won’t see relief there. If you rent - you get no benefit and actually pay more based on the 1% sales tax increase (but do save on groceries).
Is it fair? Not sure, but I think it’s as “fair” as you can get.
Many folks think we didn’t go far enough and wanted to eliminate ALL property taxes instead of just 30-50%. While that would be great and surely get everyone re-elected, it would not be prudent and would be too drastic a change that could have had major repercussions.
Some thoughts behind the bill and the reason I worked for its passage were:
* Basically, even if you have no mortgage on your property, you never actually OWN your house. Is that “fair”? Many folks in our community have lived in houses for 30+ years that have gone from assessed values of $30,000 to $900,000. Their taxes are more than their mortgage ever was. Many are retirees who could pay taxes based on the price of the house they bought but not on something that (granted) has appreciated so much.
* Removing the school operating portion of homeowner’s bills (which is what the bill did) should alleviate the “I shouldn’t have to pay for schools” mentality that some in the state have and might help us move our state forward with educational issues.
* If you own a second home or rental property, odds are you also own a primary residence. Therefore, you are still receiving a benefit because your primary residence bill comes down.
* We should encourage home ownership in this state/country and therefore renters do not get the relief; homeowners do.
* As a mortgage lender, I know that the less the property tax bill is, the more people can qualify for homeownership.
* Should we have to pay taxes on FOOD? The grocery-tax reduction seemed “fair” especially to lower income residents, regardless if they own a home or rent.
Now - with almost every bill we pass - we don’t always get it right. Let’s see what the impact will be on state revenues, business owners, etc. and we’ll probably revisit the bill and make some adjustments.
In case you missed the link above, click Property Tax Relief to see an article in The State with examples.
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2 Responses to “Tax Bills are coming! (Good news?)”
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[…] Have you seen your property tax bill? (Lexington County bills have been mailed and Richland County bills will be mailed November 6). If you’ve seen them, you’ve no doubt noticed a nice savings from your previous bills in the past. Savings you asked for when you sent me to Columbia. I listened and I delivered. […]
Although the concept of reduced property tax is appealing on the surface, it is really a shell game in which the taxpayer is the victim.
By reducing property taxes and increasing the sales tax, the federal withholding is removed for most taxpayers and therefore the marginal benefit is reduced.
Adding to my skepticism is the possibility that in another year or two, it will become “necessary” to increase property taxes to fund infrastructure, police protection, etc. We’ll be right back in the same hole, but now we’ll be paying a higher percentage of sales tax as well….advantage - tax and spend state and local government.
Several years ago, citizens of Richland County were presented with a referendum to eliminate personal property tax. It passed overwhelmingly, but most of us have seen an increase in personal property tax. Any wonder we’re not true believers?
Eliminating sales tax on food is good because the less fortunate are the net losers with sales tax. The effect of sales tax on their available funds is much greater by percentage than for more affluent taxpayers. That’s the only positive move that I’ve seen.