Do High Property Values mean Higher Taxes?
I’m still learning about how things work in Utah.
About a year ago I was driving around Northern Virginia working on an appraisal. As I typically do when driving during the day I was listening to the local talk radio show. (I know…a topic for a different post most likely…I’m addicted to local talk radio).
The topic for discussion was the huge increase in property taxes for residents of Fairfax County, VA. Real property values in that county between 2000 and 2005 increased at a rate of around 20% per year and so the amount residents paid in property taxes increased at about the same rates even though the actual tax rate remained the same. This meant that the increasing tax bills were pricing many people out of their own homes. It was a big political issue for people in all of northern Virginia.
For the past year or so northern Utah is experiencing similar growth in property values to that experienced by Northern Virginia in the first half of the 2000’s. Is there going to be the same problem with increasing taxes?
Here is a very interesting Deseret News article from last Monday that explains how property taxes in Utah are done differently than in most states.
Tax revenues are held at their current level no matter what property values are. So rising property values for Utahns actually mean lower property tax rates. The Deseret News article does a great job explaining how all this works and what it means for property owners in Utah. Props go to Doug Smeath the author of the piece.
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You know, as an employee of a county IT department in Utah, and working with their tax system, I find it interesting how the whole system works. Utah has done a great job to keep taxes low for its home owning residents. It’s a good way to keep Utah growing. However, the money always has to come from somewhere, so if not from the new mega-homes, then from elsewhere.
A real estate market running out of control is not always a good thing. Taxing a little closer to market value would help slow the tide of money pouring into loan officer, real estate agent and title company pockets as we all take turns switching homes every 6 months. The down side to this arguement is that Utah spends far less per school student than many other states. The average school in my county is over 30 years old. I have to question myself as to where our priorities lie. I would love to see my children in a newer school, smaller classroom, etc.
So, while many are able to afford bigger, nicer homes, with minimal ‘luxury real estate taxes’, we all pay for that luxury too…including our children.
Comment by Cody — June 21, 2006 @ 12:25 pm
Actually, an arguement could also be made in the reverse of that last one that Utahns with large families unfairly burden the state school and other systems, get unfair tax advantage because of tax writoffs, etc.
So, all in all, I think you’ll always see a peculiar set of state practices in Utah because we are a ‘peculiar’ state.
Comment by Cody — June 21, 2006 @ 1:21 pm
Cody,
Thank you for bringing some deeper analysis to my site!!!
I am going to consider this policy a little longer for a follow up post to this. There are pros and cons to the way things are done here.
The education stuff is for another post that is coming. In short…you are right and right again.
Comment by Jeremy Manning — June 21, 2006 @ 3:24 pm