Policy

We're Gonna Keep Americans in Their Homes…and Charge Them a 47% Tax Increase for the Privilege

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As a lifelong renter, I have watched the slow-motion train wreck that is the housing-bubble reflation/bailout with the occasional pang of naked envy: I know for a fact that crooks, deadbeats, and irresponsible goofballs are going to be rewarded for their idiocy with my money, but it stings even harder knowing that I'm ineligible for the scam myself unless and until I buy a house with a federally guaranteed mortgage. Makes it almost tempting to strap on those shackles of a fixed 30-year contract.

That is, until you remember the flipside: If government thinks something as intimate as your own live-in private property is subject to massive wealth transfers in the name of assisting lower-income and minority families, sowing "stability," or preventing the "market failure" of prices coming back down to earth, then you better be damn well prepared for government to look at that same property as the solution to its own problems. Check out what's happening in the famously malgoverned city of Hoboken:

Hoboken's municipal tax levy skyrocketed when the city was taken over by the state of New Jersey because it failed to pass a 2008 municipal budget. To fill budget gaps and a deficit, the state doubled Hoboken's tax levy, from $34 million in fiscal year 2008 to $65 for fiscal year 2009. That sent the property taxes skyrocketing up 47 percent.

Who else is either raising property taxes or thinking about it? The states of Maryland and Utah; Broward County, Pasco County, and various other Florida counties; Loudoun County, West Virginia, and Google knows how many other tax-eating entities. Explains the anti-tax National Center for Property Analysis [pdf]:

Some analysts have predicted that the recent declines in home prices could lead to budget crises for local governments that rely heavily on property tax revenue. "If property values continue falling, there will likely be a combination of three policies taken by local school districts," said [Tax Foundation economist Gerald] Prante. "They may raise property tax rates to replace the revenue, cut government spending, or simply ask for more financial assistance from state and federal governments."

A 2007 Tax Foundation study found that between 1982 and 2004, property taxes nationwide rose from $704 per person to $1,089 per person in 2004 inflation adjusted dollars.

Reason on property tax here.