WHAT MIDDLE CLASS?: Property taxes way up, property values way down.
Property taxes are way up this year. Property values are still dropping. It’s a double-whammy to anyone who owns a home in the United States, destroying the middle class.
From today’s Wall Street Journal:
ECONOMY DECEMBER 24, 2010
Pensions Push Taxes Higher
Cities Tap Homeowners for Revenue as Workers’ Retirement, Health Costs Rise
By JEANNETTE NEUMANN
Cities across the nation are raising property taxes, largely citing rising pension and health-care costs for their employees and retirees.
Not a new story to me. I saw this coming in my home of New York a long, long time ago. Today’s WSJ story has a few hundred comments and many links to it
In Pennsylvania, the township of Upper Moreland is bumping up property taxes for residents by 13.6% in 2011. Next door the city of Philadelphia this year increased the tax 9.9%. In New York, Saratoga Springs will collect 4.4% more in property taxes in 2011; Troy will increase taxes by 1.9%.
Property-tax increases aren’t unusual, in part because the taxes are among the main sources of local revenue. But officials say more and larger increases are taking hold. “This year we have seen a dramatic increase in our cities and towns having to increase property taxes” for pensions and other expenses, said Jack Garner, executive director of the Pennsylvania League of Cities and Municipalities.
OK, so property taxes are going up. At least your property values are rising, right? Well, no.
From Zero Hedge:
Guest Post: House Values Fall 30%, But Property Taxes Keep Rising
Submitted by Tyler Durden on 12/22/2010 17:42 -0500
Submitted by Charles Hugh Smith from Of Two Minds
House Values Fall 30%, But Property Taxes Keep Rising
Even though home values have plummeted by a third, property taxes are increasing: welcome to the Great Middle Class Squeeze.
You might think that with home prices off by 30% or more since the housing/credit bubble popped in 2006, property taxes would have declined by a similar percentage. But you’d be wrong: they’ve gone up. As if the massive reduction in home equity wasn’t enough of a blow to the Middle Class, they’re also paying higher property taxes.
Though house prices have declined roughly 30% nationally since the 2006 peak of the housing bubble, property taxes have continued their decade-long rise, jumping $45 billion (over 10%) since 2008.
Wait a minute! This was the most productive session of Congress ever! Nancy Pelosi is a hero! Barack Obama is a savior! So how come things are so bad?
In northern New Jersey, property taxes are rising by as much as 12% in some municipalities, after skyrocketing 80% over the past decade, far outstripping the consumer price index (31% rise) and household incomes (up 24%).
NJ Governor Chris Christie is doing the right thing, but do people have to wait so long to do the right thing? Did the hole have to be dug this deep?
Local governments should go back to the revenues and budgets of pre-bubble years, but instead they are jacking up rates to maintain revenues, even as valuations have fallen off a cliff. Bubble-era prices and equity are gone, it seems, but bubble-era property taxes are here to stay.
Property taxes, meanwhile, have far outstripped inflation, soaring from $247 billion in 2000 to $476 billion in 2010–a gargantuan increase of $229 billion, or 92%.
Read the whole thing.
Here in the Austin, Texas area, property tax increases are the standard operating procedure. School budgets regularly increase. The head of Austin’s schools is as well paid as the head of New York City’s schools, and she gets a large bonus if she just does her job.
Obama in 2008: “You won’t see your taxes increase one dime!”
Yeah, not a dime. He’s printing trillions, making existing money worthless. Our homes are worth less and are being taxed more. (But oh, that’s local taxes and they don’t count.)
Take your victory laps, President Obama. Have a happy vacation (again). You deserve it.
The rest of us, however, are in trouble.