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Different Approaches To Property Taxes Shift Wealth And Economic Activity

By Admin
Thursday, September 15, 2022

Property taxes can be a hot button issue. Some see benefit in funding the various programs, initiatives, and services the money can go towards. Others see them as a predatory money grab, gross misuse, and counterproductive tax.

 

One way to determine how well different approaches to annual property taxes really work is to look at the impact they have. 

 

There are perhaps no two more different mindsets and applications to annual property taxes in America than New York versus Florida. 

 

New York

 

New York always seems to have a reason for raising property taxes. Even though they are already incredibly high.

 

Even when tax freezes are declared, somehow they still go up. Either tax rates or tax assessments go up, leading to higher bills. Even though it has been admitted that nearly half of all bills sent out each year are wrong. With most being overcharged. 

 

Then there are plenty of questions about use of taxpayer’s funds. For example, why the governor recently awarded a donor $600M plus in contracts, and paid their company more than double the going rate for COVID tests, with taxpayer money. 

 

In response to flooding and storms the state has also seized prime coastal properties from homeowners, rather than helping them. 

 

What’s the result of all this? 

 

If we look at Manhattan, home sales have dropped by 40% this year. 12% of high net worth residents left the state in just the first six months of 2022. Then there is the crime. Which no amount of property tax revenue seems to have been able to slow.

 

Florida

 

Florida does have real estate transaction taxes and annual property taxes as well. 

 

Though, in the wake of COVID, many counties seemed to actually reduce property tax bills, rather than use it as an excuse to raise them. 

 

Florida is a magnet for the wealthy, thanks to its fantastic homestead protections. This year it is being proposed that those homestead exemptions are expanded even further for members of the military, first responders, and teachers. 

 

Also being voted on is a bill which would prevent property tax assessments being increased due to any improvements property owners make to secure their homes from flooding. 

 

It’s worth noting that around 1,000 people are moving to Florida each day. It has also become the number one state for startup businesses, and has drawn many big businesses which are relocating there. 

 

Home prices in areas like SWFL have continued to grow upwards of 30% and 40% per year. More than 4x faster than in Manhattan. 

 

Summary

 

Moving to Florida with all the heat, and leaving family and friends behind is not for everyone. Yet, it does seem clear that at least in this case, the areas which are friendlier and lower cost in terms of property taxes seem to flourish, have strong, growing economies, and attract more wealth.

 

While those that seem to prey on the very people paying them and investing in the local economy are now seeing that bite them back. 

 

Wherever you live and own property it is worth reviewing your annual property tax bills and challenging them. At least to keep the issuers of those bills and assessments honest.

 

If you are doing well enough that you don’t need the thousands of extra dollars you could be saving on your property taxes each year, the chances are very high that you may do a lot more good, and have a much greater, positive impact by using them to help those in need directly in your community, rather than seeing most of it being wasted in inefficiency and questionable accounting. 

 

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