Tuesday March 9, 2010
Posted 11 a.m. EDT
As home-owning taxpayers, the hubby and I itemize.
We've only been in our current house for five years, so we still pay a nice chunk of mortgage interest to the bank. In April (yes, we're last-minute filers) that amount goes on our Schedule A.
Plus, here in Texas where we don't have an income tax, we get a tiny bit of solace in claiming the hefty annual real estate taxes sum that we fork over every year.
Ah, yes. Property taxes. For residents of every state, both those with or without other major revenue streams, property taxes are a sore spot for homeowners.
I've been a homeowner long enough and in enough jurisdictions across the United States to know that the value the local tax assessor-collector assigns a home usually isn't the same as what the market indicates. The problem is that property tax bills typically represent the property's value at some earlier time. A price downturn might not show up on tax rolls for one (or, depending on how property is assessed, several) several years down the road.
That's been particularly problematic in this latest housing slump, which was preceded in many regions by unprecedented home price escalation. The lagging home value assessments are why we've seen lots of folks contesting property tax bills.
In Michigan, so many owners protested their property valuations last year that the state's highest tax court has 24,000 cases awaiting hearings.
Property tax hikes also were cited by some pundits as to why incumbents in New York and New Jersey, states with some of the country's highest property tax bills, were voted out of office last fall.
Paying for services: Of course, political lessons often run smack dab into operational reality.
In the Garden State, where former Gov. Jon Corzine was bounced last November by new Gov. Chris Christie, nearly a third of New Jersey's 566 municipalities got permission from the state last year to raise property taxes above the legal tax rate cap. The cities were able to convince the state to allow the hikes by warning (threatening?) that without the increase police departments would be cut, education programs axed and cities would essentially have to shut down.
The cries might not be too far from that old tale of the boy and imaginary wolf. Vallejo, Calif., filed for bankruptcy a couple of years ago. Last month, Colorado Springs, Colo., began eliminating many services.
Elsewhere, however, tax collections go forward. So do property tax assessments, as well as the appeals prompted by the subsequent bills.
That's good. Excessive taxation and profligate government spending shouldn't be tolerated.
But don't think for a minute your town -- or county or state -- can get by with no taxes.
And don't be manipulated by politicians who pander to the no-tax crowd. Those candidates are more interested in being elected than in really serving the communities in which they're running for office.
Nothing is free, especially not an effective government. So as you pay your property taxes, take a minute to think about what you're getting for, and what you want from, your civic dollars.
Check out your property tax laws in Bankrate's state tax directory.
Read more tax blogs.