Hmm, interesting. It is predictable, unless you already own the house, in
which case the change to a whole new system is totally unpredictable. How are
homeowners with increased resulting taxes helped?
Under the current system, we know that:
1. Assessments are unequal across the city relative to market value. It
appears that neighborhoods with large minority populations have had rates
closer to market value than white neighborhoods. A uniform, market based
reassessment is one way to address this.
2. Owners can get stuck when market values jump up on them and their
income doesn't keep up. They also get stuck when their income drops even if
their house is the same size, but that's hard to handle. And what happens when
the record owner passes and the family wants to keep living there?
3. I seem to recall there are state constitutional requirements regarding
equal taxation, which obviously require amendment.
4. The idea of tying re-assessment to sales has lots of appeal, since it
restricts the cases in which homeowners are forced out by rising values they
can't afford. But remember it can also jam people in the other direction when
values fall after you buy a house and you end up paying more than your
neighbor.
5. Determining tax based solely on size may or may not help the people
Karen seeks to
help. Someone would
have to run a simulated city wide, revenue neutral re-assessment based on size
to see who gets screwed and who benefits. It may be rich white condo dwellers
who get over, and people with big old houses on large lots in poor
neighborhoods that end up at tax sale, or not.
Market value is objective and subject to determination even if debatable,
and has some intrinsic logic since the tax is related to the value of the asset
(not the equity, I know). Imagine if we taxed cars on size instead of purchase
price,
My leaning is to set taxes based on regular, uniform citywide assessments, but
provide exemptions as Brian suggested that delay imposition of the increase
until a sale. That'd require a constitutional amendment, Phasing in an
increase over a short number of years would not I think help much since at the
end of the time, the owner would still be stuck. But again, I wonder what the
numbers would look like if the system were implemented.
Paul
-----Original Message-----
From: KAREN ALLEN <kallena...@msn.com>
To: UnivCity Listserv <univcity@list.purple.com>
Sent: Mon, 5 Jan 2009 5:38 pm
Subject: RE: [UC] Taxation and the libraries
The danger to longterm homeowners comes from any law that bases real estate
taxes on sale price or "value", because as Melani is surely aware, a lot of
factors determines "value".
The "equalization between neighborho
ods" that Melani mentioned cannot be done if the standard being used is
purchase price, market value, or anything else based on money, because every
neighborhood is different. Using a few of her examples from her earlier post:
102 West Highland Avenue, Chestnut Hill:
2 story, semi-detached house
lot size: 35' x 100'
total sq footage of lot 3500
livable sq footage of house: 2090
7020 McCallum Street, West Mount Airy
2.5 story, semi-detached house with garage
lot size 50' x 143"
total sq footage of lot: 7,190
livable sq footage of house 2860
716 South Clifton Street, Center City (11th and Fitzwater Sts)
3 story row house with garage
lot size 15' x 47'
total sq footage of lot: 755
livable sq footage of house 1149
1518 Naudain Street, Center City (beteen Lombard and South off of 15th)
3 story row house
lot size 16' x 40'
total square footage of lot: 640
livable square footage:1280
Obviously, the one constant in these examples is the price: $400,000. So did
the Chestnut Hill and Mount Airy homebuyers get a sweet deal? Did the Center
City buyers get
ripped off? They all spent $400K, and yet that same
$400,000 bought considerably more in West Mount Airy than it did in Center
City. And if any of those buyers tried to buy something in Villanova
for $400,000, they'd probably be laughed at.
All of that is to say that "value" is su
bjective and is prone to a lot of factors; fairness not being one of them. If
it were, no one would ask for and get $400K for a house in Center City that
wouldn't make a decent closet in West Mount Airy.
As far as Melani's example of different rates for the city wage tax, I never
said there should be different rates; I said that the standard (the constant
that is being used for making the determination) should not be based on value.
Is it fair for the person living in the considerably smaller Naudain Street
house to have to pay almost the same tax as the person living in the much
larger McCallum and Highland ones? But because they paid the same price for
the houses, similar taxes is considered "fair".
If the constant in my examples above were livable space and lot size,
"equalization between neighborhoods" could occur. Homeowners in Center City
would pay substantially less than the homeowners in Northwest Philadelphia. Yet
they would all be paying at the same predictable rate. And current
homeowners would not have to be put in the position of fearing
neighborhood improvement and worrying about losing their
homes.
From: mlam...@aol.com
Date: Mon, 5 Jan 2009 14:52:06 -0500
Subject: Re: [UC] Taxation and the libraries
To: kallena...@msn.com; univcity@list.purple.com; briansi...@gmail.com
In a message dated 1/5/09 12:18:43 AM, briansi...@gmail.com writes:
....how about this for a solution?....for
_primary residences_, people's _homes_... apply the new tax standard only to
properties purchased after the date the tax standards take effect.
This way, current homeowners won't have to worry or make radical readjustments
to keep their homes. Their taxes remain as they are. But if they sell, the new
tax structure applies to the new owners.
----------------
In a message dated 1/5/09 11:38:57 AM, kallena...@msn.com writes:
If the city were to collect the same amount from everybody whose house has the
same value, the City would have legions of people who would be forced to move
because they could no longer afford to pay the property tax.
A person who paid $50,000 for their house in the 1960's or '70's would now have
to pay the same tax as someone who last year paid $500,000 for the house next
door. The person who paid current market value would presumably have the
financial ability to pay. That cannot be assumed about longterm homeowners. And
longterm homeowners should not be forced to choose between providing for their
families, and paying an exhorbitant property tax.
I think that you rather radically misconstrued my example. I didn't say
anything about taxes going up on all similar houses, every time a house
sells.
The taxes on the houses in my example weren't set by the BRT AFTER the houses
sold for $400,000 - they were set THE YEAR BEFORE the sales, when the houses
hadn't sold at all. The tax amounts
on those houses a
re likely the same as the other homeowners on their blocks were and are
currently paying - whether they arrived in the 1960s, as in your example,
Karen, or in 2007. This is definitely the case at 426 S. 47th; you can look it
up on Hallwatch.org. The sellers moved into the house in 1971. Yet their tax
bill, $3372, is the same as that of their neighbors who arrived on the block in
2006. There's no increase for the neighbors based on the 2008 sale price, and
no need for anyone to panic and move!
My example was to show that there has to be equalization between neighborhoods,
because assessors for different areas don't seem to be setting assessments at
the same level even when the houses have the same value. I used current sales
because we can be most certain of the actual market value for the houses that
just sold - $400,000!
If the end result of the BRT's corrections is to be tax neutral, then we're not
talking about raising everyone's tax on the $400,000 house to the amount being
paid by the highest payer now, to $3578. Nor are we talking about lowering
everyone's taxes to the amount now paid by the lowest payer, $1542. We're talki
ng about everyone paying somewhere in between those two rates. Some folks
would pay somewhat more, and some would pay somewhat less. Brian, I'm not
saying that on your block, taxes should increase to the point where they are
unaffordable. I'm saying that if houses o
n your block are selling at about $400,000 and an assessor has set a rate for
your block based on that, then the blocks in the Graduate Hospital area where
houses sell for that amount shouldn't be paying lower taxes than you are - and
the blocks in Chestnut Hill where houses sell for that amount shouldn't be
paying higher taxes than you are.
Your ideas for different systems of taxation are interesting, Brian & Karen,
but not currently legal; PA law says that these taxes must be equal. The
problem is that they are NOT equal right now; the city is breaking the law.
The City is required by law to assess everyone at the same rate and have them
pay the same property tax for all properties with the same value. (But there
are legal ways to write special protections into the laws to postpone or
otherwise soften the impact on the elderly, those on fixed income, and others
in special situations. And of course, if the condition of your house is much
different from the average condition of other houses on the block, that can
affect your assessment,
because it affects your value.)
"Spot assessing" - the practice of raising the assessment only on the new
buyer's house but not on similar houses on the block - is illegal.
Turn the example around for a minute and let's talk about another tax we pay:
wage tax. Would it be legal for the city to say that as the wage tax rate
changed (up OR down; this tax has been going down)
, an employee would continue to pay the same rate as when s/he was hired,
rather than having his/her tax rate adjusted along with everyone else's rate?
Would we say, "you were able to pay that rate when you were hired, so you must
still pay that rate, even though if you were hired today, your tax would be
lower? Or higher; would it be fair to charge a new employee a higher rate?
By law, that isn't how property or wage tax works! Everybody pays the same
rate, no matter when they come or go. All properties worth the same amount of
money are required to have the same property tax bill. And I checked today
with an expert on Philadelphia property taxation, who tells me:
<<I believe that this all should be corrected by the “new/actual” values that
should be rolled out this year.>>
Stay tuned!
- Melani
Melani Lamond, Associate Broker
Urban & Bye, Realtor
PA License Number AB048377L
3529 Lancaster Ave., Philadelphia, PA 19104
cell phone 215-356-7266 - office phone 215-222-4800 #113
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