Property Taxes are driving folks out of where they have lived forever
I know that forever is a long time, however property taxes are really a burden on many.
Everyone is excited when the value of their home goes up! This means they made a good investment decision and they are wealthier than they were before.
They have an appreciating asset which in most cases they have locked in with a fixed rate payment over 30 years.
BUT WAIT - There is a big downside to rising home prices as well.
Just like your retirement portfolio, you are happier when your house value goes up. However, do you really care about your 401k prior to your retirement? Realistically it doesn't really matter at all.
The same goes for your house value; it is cool that your house is worth more, but if you intend to live in it, what difference does it make what it is worth?
WELL IT DOES MATTER WHAT YOUR HOUSE IS WORTH, IN A BAD WAY.
Typically your property taxes are based on the value (assessment) of your house. If your house goes up $100k in assessed value and your tax rate is $13 per $1000, then you will be paying another $1300 a year in taxes.
I have recently read articles about this happening on Cape Cod: link and another about Miami which I don't have to share with you.
How Rising Property Values Affect Homeowners
Basically, here is how it goes:
You live somewhere and you are happy.
People from somewhere else come in and buy.
They raise the property values either by paying more or by building new things.
The price of all houses in the area rises in value.
You now pay more in taxes.
Those on fixed income and many others can't afford to live there.
The culture of the area changes.
Sadly, we are seeing this happening in Worcester, but it is the City Council's fault.
Issues with Local Tax Policies
The council has maintained a split commercial/residential tax rate. This has caused businesses to leave as taxes are lower elsewhere, resulting in:
More of the tax burden pushed to homeowners.
Homeowners (who vote for city council) trying to push more taxes onto businesses.
More businesses leaving.
The only new businesses being residential buildings or buildings with tax deals.
Taxes rising on homeowners as there is no one else to tax.
Homeowners being pushed out because they cannot afford the higher taxes.
Proposed Solutions
What we need to do is reverse this trend:
Lower taxes on businesses to encourage more businesses to locate in the city.
Increase wages for residents and people who live in the city.
Increase the number of businesses, which will increase the tax base.
This will in turn lower the percentage of taxes paid by homeowners.
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