• Property taxes Property taxes The current debate about evaluation of property for taxes ignores what I think is an important injustice. The debate focuses on whether evaluations are too high or low when applied to levying property tax. Currently
• Property taxes
Property taxes
The current debate about evaluation of property for taxes ignores what I think is an important injustice. The debate focuses on whether evaluations are too high or low when applied to levying property tax.
Currently the County of Kaua‘i is trying to achieve an property evaluations based on the “fair market value” of land and buildings.
I think the real issue is that it is inherently unfair for government to tax property owners on the basis of the market value of their homes. It is a scam by government to gather ever increasing taxes on income not made by the tax payer.
For example: Twenty five years ago a young couple puts everything they have saved into buying a house. They are saddled with a 30 year mortgage that will burden them until they are old enough to retire. They never move or sell their house and they are just able to scrape by. Over years they have spent thousands of hours gardening, and fixing the place up.
In the intervening years property values have risen. In fact in the last five years their home’s market value has increased 400 The couple is now on a fixed retirement income. They can no longer afford to pay their property taxes. Should the couple be forced to pay taxes on an estimation of the value of their property when they have never received as income that increased value? I don’t think so.
In fact I think the only property tax that should be levied is that calculated on the selling price of the property. If you buy a house for $250,000 that should be the basis of property tax until that property is sold for some other value. The only place “fair market value” should come into play is if a house is sold for less than a fair price; as when a parent sells a home to a child for a $1. In that case I think the original selling price of $250,000 should be the evaluated price.
My argument for this approach is that there is no good reason for the government to “benefit” from a booming real estate market that tends to price local people out of the market. It is unfair for local people to pay ever increasing taxes on something they do not benefit from. The effect of these taxes, based on estimated values, is that it influences local people to “cash-out” and move away in order to benefit.
The couple who have improved their home and would like to turn it over to their children are chumps. They are paying taxes on a million dollar house and living like paupers. Another scenario, and one which will eventually come, occurs on the downside of the real estate boom. Our local couple hangs on for years paying ever higher property taxes. Their kids give up looking for a house in the crazy real estate market and move to the mainland. A year later the market crashes when gas hits $9 a gallon and the visitor market goes belly-up. Our couple cannot get more than what they originally paid for the property. What suckers! They paid taxes on the place for years as if they were millionaires. If they had been smart they would have sold that place to a California lawyer, at the top of the market, for big bucks. Then our couple could have move to a trailer court near the kids outside Vegas and have some extra money for the slots.
I propose that the County Council review the possibility of setting the evaluation of property on the basis of its last actual sale price. That would be an undisputed, factual and fair basis for a formula for taxes. It would also allow everyone to have a more accurate of estimating future tax revenue and burden. The alternative has proven to be smoke and mirrors and greed.