Tuesday, February 20, 2007

The End of Property Taxes for Homeowners?

A new and interesting proposal has surfaced in the debate concerning the extreme inequities associated with the current "Save Our Homes" property tax system (aka, "Screw The Children").

The basic concept: all homeowners would no longer pay taxes on their primary residence, and all other properties (rental, commercial, investment, vacation) would still have property taxes, but have an annual cap on increases. The difference would be made up by increasing the sales tax to 9%.

From today's St. Pete Times.

'TALLAHASSEE - House Republicans are developing a proposal to eliminate property taxes for all homesteads while increasing the sales tax by a few pennies to make up the difference.

The plan, which has quietly gained favor among House leaders in recent days but lacks detail and has yet to be announced, also calls for capping property taxes on businesses, second homes and other nonhomestead property.

The cap would likely be tied to population growth and inflation.

"Everyone's pretty excited about it," Rep. Anitere Flores, R-Miami, said after emerging from a property tax summit in the House on Monday afternoon.'

Like we've said, it's been a bear of an issue, because I can personally attest to how f-ed up the current system is. The house that I'm currently living in (a starter home built in 1994) is paying $5500 a year in taxes, while a neighbor across the street is paying only $2200 a year. This is just plain wrong - in so many ways. They have to do something.

'Property taxes promise to be the most challenging issue in the Legislature's upcoming session, in part because of the inequities in the current system, which favors long-term homeowners over new residents while pushing more of the burden on nonhomestead property.'

Right - so here we go!

'An increasing number of lawmakers feel the best remedy is to simply get rid of property taxes homestead owners pay to schools, cities, counties and special taxing districts. The idea is contained in House Speaker Marco Rubio's book 100 Innovative Ideas for Florida's Future.'

On the surface, it sounds like a very intriguing idea, but there are numerous drawbacks. Starting with the fact that a consumption tax is regressive, whereby the poorer you are, the higher % of your income goes to the government. So, out goes the reasoning for the SOH tax system that protects the old ladies on fixed incomes.

That aside, there are other concerns.

'But an increased sales tax could hurt businesses in North Florida, where shoppers could go to Georgia or another state. Also, sales taxes hurt the poor more than other income groups. Vacationers, too, would pay more to visit Florida.'

Can you imagine being an appliance seller or car dealer anywhere within 200 miles of the border? Those businesses would get killed with a 9% sales tax. Also, do we dare tinker with tourism, our #1 business?

Still, I like the idea - thinking way outside the box is a good thing, especially in times of crisis. Don't know if the voters will go for it or not. What do you think?


Bill said...

I've always thought that property taxes are a pretty bad idea. It's a tax that can easily get out of control and hit those least able to pay it. Of course, I'm not too keen on sales taxes, either, for basically the same reason. I think income taxes are a far superior way to raise capital. Too bad you guys don't have it down in Florida.

zippo said...

Good point - somehow I think this latest proposal will pass, then people will get mad (again), and then another amendment will get proposed (say, in 2012) to finally bring in the income taxes. Then we'll be like every other sane state in the union.

But then again, the "we want free money" lobby keeps growing, so who knows?

walksonwater said...

Tennesse has a 9+% sales tax, with no income tax, and low property tax.
It seems a lot of Floridians are moving up there, for tax relief.
Maybe they just want to get away from the hurricance insurance problem?

Anonymous said...

Why aren't the legislators addressing the current falling property values, and how this will help lower everybody's taxes. Sarasota-Brandenton, off 18%. Cape Coral-Fort Myers, off 23%, from the high. At the current rate of property value decline, taxes will be back where they were in 2001 by the end of 2009.

If the legislators would admit to falling property values, and point out this fact, in the end, nothing would need to be done about high taxes. The problem will take care of itself.

lizziebeth said...

Just peeking to see what's new at Paradise Lost. Nice to see that things have calmed down a bit here. Anyway,here's my two cents.

I would much rather have a 9% sales tax than property taxes, even if values continue to plunge. Maybe they are pushing this issue because the mess dropping values will cause! Every homeowner will be demanding reassessment.

If the sales tax doesn't include food, the lower income folks won't have to worry too much. They do have tax free weekends every year for clothing, and school related supplies. There are many charities out there that help the poor. You'd be amazed at how much is out there.

It's middle income folks who will feel the squeeze. However, they also will benefit by lower property taxes. Many can afford their house payment, but find it hard to come up with the insurance and tax money.

The only downfall I see is the businesses near the border. I wonder how they handle it in Tennesee?

Tourists are used to the high taxes. Two cents more really won't keep folks away from visiting the mouse. Heck, last time I went to Mouseville, I thought we could solve the tax issue by having a tax on foriegners or charging them a higher fee. Seemed every other person visiting was from another country.

Dragasoni said...

I'm totally against this proposal. Why should I have to pay the price for these idiots who bought a $300,000 shoe box, and now can't afford their taxes? Hey, they cashed out every dime of that 'equity' by choice. They should have known their assessed values would rise as a result, thus the tax increase. I say let the morons foreclose on their property, and sell their homes back at a fair price.

All this will do is hurt people like me who are renting because of the enormous cost of owning, kill tourism, crush small businesses along the GA border, and further put off the needed depreciation that's needed to make homes affordable again. It's a terrible idea.

I think they should just end the save our homes tax, reassess all properties factoring in any loss in equity that may have occured, and tax accordingly. This save our homes cap is total madness.


Anonymous said...

"Tourists are used to the high taxes. Two cents more really won't keep folks away from visiting the mouse. Heck, last time I went to Mouseville, I thought we could solve the tax issue by having a tax on foriegners or charging them a higher fee. Seemed every other person visiting was from another country."

Great Point Lizziebeth,

I share the same opinion, get rid of property tax. Where I come from I am currently used to paying 14.5% GST and PST so coming to Florida and paying 9% is a gift combining that with no property taxes and we would be happy.

In The Bahamas as a tourist you pay a $15.00 exit fee when you leave.
Imagine the revenues they would generate if they charged the foreigners something like that.

Anonymous said...

How do you think this would affect the housing market collapse in Florida?

I know that many of the homes for sale are owned by out of state/country investors so this new plan doesn't help them out anyways.
What about the rest, would this new idea be enough to save them?

Anonymous said...

Great. A homeowner with enough money to purchase 'rental' or 'vacation' property complains that they can't afford the taxes on their primary residence (in addition to the other properties they may own). So 'lawmakers' attempt to 'fix' the system by charging everyone who buys something more sales tax in order to cover the tax liability of the poor, unfortunate homeowner.

"Everyone's pretty excited about it," Rep. Anitere Flores, R-Miami, said....

Yeah, I'll bet they are.

lizziebeth said...

Hey Anon,

The tax relief wouldn't help just the investors. Keep in mind the investors are already screwed! No tax relief can take away the burden of the depreciating asset they already own. The tax relief would help people that are renting hoping to buy one day(like me), folks wanting to move up or downsize..... This proposal saves so many more Floridians that aren't specuvestors. Like I said, they're already screwed in the upside down investment. Keep in mind they still have to pay their exotic mortgages, upkeep and insurance. Even with tax relief most will find themselves in foreclosure or renting.

Andrew said...

Hey Lizziebeth,

I peeked in to today, and low and behold the coast is clear. lol

Hope your doing well hon, I love this new idea.
I hope it passes.


lizziebeth said...

One more comment Anon, Speculators weren't homeowners with enough money to buy a second home or vacation home. If you read up on the bubble, you'd know that many of these properties across the nation were bought using liars loans and exotic financing.

Hi SKB! Haven't been to the Housing Bubble Blog lately. Too big. I hope this site keeps going without any nastiness. I haven't read previous posts, so don't know when the nastiness stopped. So when you moving down????

Jack_Holl said...

It seems to me they are robbing Peter, to pay Paul. When Paul gets all the money, then we can rob him, and make off with the booty.
Some how, I think, the Florida tax payers are going to get the long end of the shaft!!!

sumo joe said...

If property taxes were eliminated, the price of homes would just go up even more.

Out of control development will continue, and the state would soon need even more schools, roads, etc.

2 cents will feel like nothing.

bearmaster said...

Once again, renters get screwed.

Get_1st said...

Florida's constitution says no income tax. Snowbirds don't vote.
SOH home owners won't vote for tax increase. Sales taxes are regressive and penalize the middle class and the poor. So they won't vote for that either.

Everybody, that trusts a politican raise their hand.

Anonymous said...

You people are so gullible. Read my lips. "Politicians will never fix any problem." Governments are only concerned with getting their hands on more of your money. That means they have researched this and can get more of your money by raising the sales tax.
This will also create a land rush as northerners flood the area to buy property which has no realestate tax, and they will only pay sales tax for a few months here. Prices will no longer correct to the proper level, but will shoot up.
If $3000 can be saved in taxes each year it only stands to reason that they won't mind paying more for the property.
And think of all the money those who live in the McMansions will save. They will surely want this passed.
In the end, only market forces will cure the realestate tax or the insurance problem. But it will take time.

SKB said...

Hey Lizzie,

Not sure what happened here, I think Crazy finally got sick of posting all by himself so he got mad and took his last few marbles he had left, home. To bad for him, if he thought that people would respond to his posting when all he does in the end is bite your hand. He should not have been so surprised.

lots of interesting stuff on the other blog as of late. I am sure if you are like me you have already read a lot of it on the internet anyways.
Well it's official my husbands rotation has been approved and we are headed to West Palm Beach. We are hoping to be out of here by July. I have been though this waiting game before so who knows when our move could actually happen. We really hope July, lots of homes for rent down in that area.

Take care hon,


sumo joe said...

This is part of a larger comment from someone on the Housing Bubble Blog.

"There is a limited supply of qualified buyers for stuff over $250K, and once the underwriting guidelines come back to normal, you will see everything over $400,000 basically implode with haircuts of at least 50% - that’s everywhere. This is because incomes don’t justify the pricing. Again, for those in SoCal coastal areas, this is everywhere. I dont know FLorida r.e., but after almost 20 years in various areas of r.e. (appraising, review appraising, mortgage, worked for KB Homes), I can tell you that SoCal is in trouble. It will be a bloodbath in most of South OC, Inland Empire, Bay Area, etc."

lissiebeth said...

I think the concept of a reduction in property taxes would be good for the State of Florida, and the 9% sales tax would reduce marginal spending of the spend thrifts.
Bottom line, it would be good for me and not so good for them.
But, isn't that they way politics works. Make the other guy pay, by voting for your favorable legislation.

lissiebeth said...

Hey SKB;

Did you see one of the other blogs, named Southern Maryland Housing Bubble Blog, folded up.
They said they offered insightful commentary, that's a laugh.
It was almost as bad as Frank's Blog. I really burned some ears over there. LOL

Take Care, well see you in the Sunshine

lizziebeth said...

Well SKB,

He's back. It was short lived but nice. He did the same thing over at the Housing blog. Making qoutes using my name, or similar. I thought they finally found a large enough crane to get him out of his trailer. I was wrong!
He doesn't seem to be able to post his rants over at the Housing Bubble Blog. Funny thing is they just don't respond to him even when he's man enough to use his real name. Of course since he can't see his tool anymore, he may be questioning his manhood, thus needing to pose as a woman. Hopefully his trailer will be blown over before you get here.

SKB said...


I was almost fooled until I realized he was using the wrong signature.

Does he live in WPB? God, I hope not.


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Anonymous said...

Property taxes are actually not taxes at all. They are actually property rents. Homeownership is a myth and a lie. The state and county owns all property and wants only currently rich and wealthy people to have a roof over their heads The term "property tax" is a mask and a cover up for what it really is. When one pays off a mortgage, or as it is called "paid for the house", the person has not bought the house at all. The person has bought a privilege to occupy a parcel of state and county property. The government landlord then continues to charge and levy rents every year that pay for county funding and the beaurecrats. Anyone who is unable to pay in full and on time is evicted, stripped of all posessions, and made homeless. And the government landlord will care less if the person has young children, or has been laid off, fired, or is disabled; as said earlier, the government landlord wants only rich people living on his properties and will forcefully and swiftly gentrify the county without hesitation, as he is doing in Palm Beach and Broward counties. Then again, not only is this bad for the eviction victim, it is also bad for the neighborhood as since the house can stand vacant for as long as a couple of years while the landlord is wasting his time trying to find a millionaire to occupy the parcel, gang bangers and drug dealers break in and occupy the vacant parcel, turning it into a drug house where they make methamphetamine and crack cocaine, recruit more gang bangers and drug dealers/drug runners who then go out doing shootings, robberies, assaults, and street dealings. Now the neighborhood has a crime and drug problem, which the government landlord simply turns a blind eye and a deaf ear to. As the cycle repeats, more drug houses are established, and it can cause the entire neighborhood to fall into ruin.

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