1. The PI never seems to amaze me. Perhaps they should win an award for their history of sloppy reporting on local politics?

Posted by: Patrick on January 13, 2007 01:05 PM

2. Capping property taxes at 1% a year does little when your assessment increases at 15 to 20% a YEAR!!! Thanks to Fairfax County VA, my assessment has increased at a 15 to 20% rate for the last few years. Every time I re-financed to save money, the money saved went to pay the tax increase. Every year, a larger and larger percentage of my payments goes to property taxes instead of equity. My pay raises in the same period average between 3 and 5%. Why should the county/state get a bigger pay raise than me?

How can a cap on assessments for the owner raise home prices for buyers? If I own a house for 10 years, then sell it, the assessed property taxes will be the SAME whether or not they were capped, simply because they were set to the market value of the house. In fact, they might even be lower because if the market was depressed at the time when the house sold, the assessed value would be lower. When did you ever see assessments adjusted downward????? Also, I might not feel a need to sell the house for so much because I was able to save the money from lower property taxes. If they were high, I would be inclined to raise the price of my house to recover the cost of the additional taxes.

And what about the rural landowner suddenly penned in by McMansions? Should they be forced to move because they cannot afford the exorbitant tax increase when they are on a fixed income?

Posted by: rbb on January 13, 2007 01:08 PM

3. Stefan,
How is the reassessment provision analogous to rent control? It does not set the price for which a house can be sold and it does usurp the terms of any private transaction, both of which rent control does. What the provision does do, however, is level out a homeowner's total mortgage payment over time, something that should have been done decades ago so that aging homeowners are not taxed out of their increasingly valuable homes. This seems like one that the dems got right for a change.

Posted by: srogers on January 13, 2007 01:09 PM

4. The 10 o'clock news last night had a bit on the "hourglass" shape of Seattle's housing market. The upper half of the hourglass represents homes for the wealthy, and the lower half subsidized housing. Only 2% of the houses currently for sale in King County can be afforded by the median KC income ($56k).

Olympia and King County's response: Let them eat cake.

Posted by: Organization Man on January 13, 2007 01:29 PM

5. Terrible idea. You're entirely correct, Stefan.

Posted by: ram on January 13, 2007 01:41 PM

6. I have seen a 33% increase in my property for the past 30 years annually. from 60k in 1976 to 601K this past year, which jumped almost 200k.

Gregoire promised last year to limit these massive increases in property taxes, but then again she also said (promised) while she was running for office that she had never raised taxes on the people of Washington.

Rossi Rossi Rossi in 2008, flush the queen and her massive tax and fee hikes!

Enough is Never Enough for that bunch!

Posted by: GS on January 13, 2007 01:53 PM

7. I applaud the idea of freezing assessments until the point of sale. This will close the loophole that keeps property taxes going up at a pace far beyond the rate hike limitations previously passed by voters, and everyone benefits from that. Even renters, because landlords will not see their taxes skyrocket and have to recoup the difference in increased rent.

You would have to explain just how this hurts first time buyers, unless you actually are suggesting that we ought to be forcing retirees out of their homes via higher taxes so that the young have an amply supply of housing to choose from. Which I doubt was your point.

Posted by: HT on January 13, 2007 02:11 PM

8. This could be a setup to demand and income tax. We will limit the growth of property tax but you have to agree to an income tax. That is what I fear will happen. And it will cause lots of problems and cause even more bankruptcies within the state. The state and County demands for money can not be met. And keep a growing economy. Eventually it is cheaper to leave the state than stay in it.

Posted by: David Anfinrud on January 13, 2007 02:49 PM

9. A lid on assessment increases benefits those who have owned their property for a long time, but it is not "free" -- the taxing authorities do not get any less money as a result. The total amount of property tax collected remains the same (actually, under I-747, the total can go up 1% a year plus increases for new construction, more with voter approval). Your assessment determines your proportionate share of the total property taxes paid by all properties in the jurisdiction. Thus, if your assessment is frozen, and the total amount of taxes to be collected goes up, the additional portion you would have paid gets shifted to other taxpayers. Imagine you and your next door neighbor have identical houses, each built 30 years ago, but you bought yours ten years ago for $200K, and he just bought his this year for $600K. Both of your houses are actually worth $600K on the open market. With the 1% assessment increase cap, you would be paying taxes on $221K, and he'd be paying taxes on $600K, even though your homes are worth the same and you use basically identical services from the government -- some of what you would have otherwise paid has been shifted on to your neighbor. Many people would say that is not fair, and that's why our state constitution currently requires all property to be taxed at current fair market value at the same rate. Now imagine the tax shifts that will occur with huge very expensive commercial properties that almost never change hands -- such as Puget Sound Energy's entire power grid. In general, residential property changes hands more often than business property, and the result could be a further shift of property tax burden from businesses to individuals. Those are the potential inequities of the proposal.

A similar system has been in place in California since Proposition 13 passed back in the 70's. My younger brother and I together own the house our dad lives in down in Redding. I have to admit that it's been very nice to have the property taxes absolutely capped at 1% of the value and the assessment increase capped at 2% a year; it makes budgeting much easier. Do I feel bad that we're probably paying less than a third of the taxes of the next-door properties, both of which have changed hands much more recently? Um, not really. At least those buyers knew what they were getting into at the time they bought their houses, knew what the taxes would be, and can predict what they'll be for years down the road (unless the legislature overturns Prop 13, which is kind of the "third rail" of politics in California the way the state income tax has been in Washington). They qualified for their mortgages at that level, and are pretty comfortable that they can afford it at their current income. Even though they're paying way more than us, they at least have the comfort of knowing they're not going to be taxed out of their homes, at least so long as their income holds up. Here in Washington, we can all take comfort in knowing that we'll all be taxed out of our homes together. Which situation is better? Equitable but increasing tax burdens, or stable and unequal tax burdens?

Posted by: Toby Nixon on January 13, 2007 03:04 PM

10. Toby: Which situation is better? Equitable but increasing tax burdens, or stable and unequal tax burdens?

Neither situation is desirable. But it's a false choice. Why not the best of both worlds -- the amount of taxation (not the ad valorem rate) is what should remain stable and grow only very slowly, but the burden should be apportioned equally.

Lucky for you your family home in California enjoys low and stable property taxes. But that's not a very good system for attracting new people to an area or for encouraging young families to stay. This is a part of why we left California. We were living in my condo that I bought before I was married and we needed a bigger home for the growing family. California's high housing prices are exacerbated by the illiquidity caused by Prop. 13. And in addition to a high purchase price, we'd have a huge step-up in property taxes. It was financially attractive to get out of Dodge. I'd hate to see the same thing happen here.

Posted by: Stefan Sharkansky on January 13, 2007 04:05 PM

11. I don't read that rag!

ot: Demorcraps of this area didn't sand the hills of 124th because they were drumming up business for their cousin vinny's body shop!

BTW loved seeing the car with the Rossi sticker! :D That will show them kerryass supporters plastered with stickers :D LOL

Posted by: dcat on January 13, 2007 04:17 PM

12. Yes Stefan I agree with you!

My husband came from Torrance and I saw the shack that he grew up in. I wouldn't pay 2+ mil for it! No way!

Posted by: dcat on January 13, 2007 04:27 PM

13. What gets me is the voter initiative that passed overwhelmingly is unconstitutional (because we did not know what we were voting for), yet the legislature can go ahead and make a law about the same subject? Makes me wonder if the judge in the case had heard anything about this new legislative proposal through the grapevine.

Posted by: TrueSoldier on January 13, 2007 05:56 PM

14. Stefan: since we can't get the Legislature to pass an absolute cap (and restrict spending to match), the next best thing is assigning the out-of-control increases to new buyers, who at least know what they are getting into (and then, in turn, have their own increases capped). That is far preferable to the current system, where everyone eats the increases but only people on fixed incomes who happen to own their homes really get the shaft. If that hurts liquidity in the housing market, then so be it. I'm not going to approve of throwing old people out of their homes just so that new families can trade up from their condos.

So the good news is that your preferred solution is #1. But has no chance of passage. The idea currently on the table therefore comes in a clear #2 and wins the derby, far ahead of doing nothing in the name of "equity" and "liquidity", which finishes a distant #3.

They say that the perfect is the enemy of the good. This is just one of those cases.

Posted by: HT on January 13, 2007 06:24 PM

15. That taxing scheme is partially why California property values are so high. There's a large incentive for current property owners to remain where they are rather than selling and buying a new place. After all, why should you sell and have your property taxes skyrocket? Your new house may be much nicer than your current house, but you're going to pay through the nose for the priveledge of owning it.

Thus, the number of houses on the market is forced down. Supply and demand. Fewer houses for sell means the buyers must pay more. Much more. QED.

Posted by: Mike S on January 13, 2007 08:18 PM

16. Stefan, I think I understand your arguement about sharing burdens equally, but isn't the effect of such a scheme as this to promote stable neighborhoods? If there is no economic incentive to sell one's property, wouldn't one just stay put? Or maybe the incentive is to not improve the property, as this would jack up the assessed value. In a way, the current system, reassessing the value of a property every year, is like taxing unrealized capital gains, though there may be good reasons for calculating the value of these unrealized gains (medicare qualifications and the like) -- it still seems inconsistent with a normal understanding of "fairness".

I'm still reserving judgement on this one, pending a understanding of the effects of such tax/valuation policies.

Posted by: mark on January 13, 2007 08:46 PM

17. If property taxes are to be utilized, then the taxing authority must set a budget that includes $xxx of revenue. The job of the Assessor is to see that $xxx is collected fairly depending on the relative value of all properties. If my share this year is $yy, and if my assessment goes up 10%, my tax should remain at $yy provided the average county-wide assessment goes up by 10%. I should not be automatically taxed more because the value of my property has gone up. The total $xxx collected should have the growth limit. This needs to apply to all levels of government, including local taxing districts.

Posted by: Seabecker on January 13, 2007 08:50 PM

18. Toby, as usual, is right.

Posted by: The Geezer on January 14, 2007 08:57 AM

19. "Lucky for you your family home in California enjoys low and stable property taxes. But that's not a very good system for attracting new people to an area or for encouraging young families to stay. This is a part of why we left California. We were living in my condo that I bought before I was married and we needed a bigger home for the growing family. California's high housing prices are exacerbated by the illiquidity caused by Prop. 13. And in addition to a high purchase price, we'd have a huge step-up in property taxes. It was financially attractive to get out of Dodge. I'd hate to see the same thing happen here."

So, those of us who might have been here before you get the privilege to pay for your financial decision, and decision to have children, Stephan? I'm shocked! Shocked! LOL I hear that there is plenty of 'more affordable' housing in Visalia or Stockton (NorCal), or to Mojave or East Riverside County (SoCal), instead!

(full disclosure: FT = ex-pat Angeleno (PVE '62-'72, RB '72-'76), San Luis Obispan ('76-'81), San Diegan ('81-'92))

Posted by: FT on January 14, 2007 09:03 AM

20. 9 & 10 both make good points.

in fairness, when property values go up and people pull out or leave equity, that's ok. however, when their related value-based taxes go up, we scream. left alone, the market forces up taxes automatically if based on assessed values, keeping all other variables fixed. a combo of items need addressing--e.g. mill rates, values, caps all working together.

also not mentioned is spending. sure, we can fill our prop. tax coffers, but do we need all we want or buy in a city? do we audit spending and try to limit it? like our own home checkbooks.

spending restraint is critical too. can't have everything. live within means or just below. every city does not need its own state-of-art rec center and library and art center and, and, and...

Posted by: jimmie-howya-doin on January 14, 2007 11:00 AM

21. Interesting dynamics at work. Free market forces are no longer free.

On the one hand the State and King County are artificially driving up the costs of housing by reducing the supply of land to build-on. On the other hand they propose a 1% cap on assess value on homes. The impact will cause prices to continue to increase, resulting in impacts one may only imagine. California and NYC may serve as a guide.

Low income families are basically shut out. Middle income folks remain till their income drys up and they move on to greener pasutures. Sorry those greener pastures don't exist. So they move on to another state or country.

That leaves the higher income folk. Or does it. Sooner or later even the insulated wealthy realize that business becomes uncompetitive when hired help becomes expensive and they can't pass on the gains to their family members ore retire in fashion. Remember several notables already moved out of Seattle. Many more will follow. It is only a question of when, not if.

My suggestion is to once again free market forces. As tinkering with the force only causes disruptions.

Back to the game.

Posted by: Snuffy on January 14, 2007 03:54 PM

22. This amendment would simply prevent the state property taxes paid by people living in areas with quickly appreciating property values from going up as quickly as they otherwise would.

The flip side of the coin is that the taxes they avoid would be paid by those living in areas where values don't appreciate rapidly.

Take special note of the fact that this amendment would have no effect on the increases in total property tax revenue collected from everyone. It would simply shift the burden from one group to another -- from those already in their homes to those in newly purchased homes, and from those in areas with rapid rises in valuations to those in areas with stagnant real property markets.

It wouldn't be fair in any sense of the word; but that doesn't matter, I guess. People who have no idea how the property tax system works will be in favor of it, and those who understand how it works and how they would benefit will favor it -- and that's almost certainly a majority.

Posted by: Micajah on January 14, 2007 04:37 PM

23. Watch out- there's some horsetrading going on to remove the supermajority requirement for the school levies.

gluttons don't stop feeding [or taxing in this case] until they collapse in on their own hoggishness.

Posted by: Andy on January 14, 2007 06:58 PM

24. Back from the games.

A person buys a home back in the sixties. About 55 years ago. He pays $45,000. The home is now worth over $900,000. Over the years the valuation for tax purposes has risen. Tax assessments have also risen. One may argue inflation ($ devaluation) is in great measure incorporated in the higher value of the home. And the money paid for the home when it is sold is really nothing more than inflated dollars and the home owner paid a substantial amount of taxes over the years even though the home owner did not receive an income from the home until the home is sold. This is perhaps a valid argument to clarify some of the complexities within the tax system. But this argument points out the problems of senior citizens on a an income not matching appreciation of the taxable assets. It is a serious plight that is made more serious when the taxable assets, property, may not be divided for easing the burden and yet is tax in entirety for valuation purposes. So if the property amounts to 20 acres and 50% is suddenly made unlivable because of government edicts and indivisible by the same edits. One would suggest that the person suffered a loss. The community suffers because the 20 acres may not be developed and the person's children who would otherwise occupy the family land, must compete for available homes elsewhere. This creates a shortage of available homes and further strains and already strained housing market.

But, alas the tax man wants more. Politicians must support their special interests that elected them.

Home values increase because of inflation, dollar devaluations and artificial market controls. Assessments increase because of power and greed.

The tax man ultimately visits all. As goes the plight of the property owners so goes the plight of the condo owner and apartment dwellers. It just a matter of semantics. Some say income, others say property or gas or license plates or social security or medicare, etc. It doesn't matter what you call the tax you pay. It all goes in the same pockets to be re-distributed.

Posted by: Snuffy on January 14, 2007 10:28 PM

25. Excuse me, 45 years ago for the home purchase.

Posted by: Snuffy on January 14, 2007 10:30 PM

26. Models claiming that senior citizens use relatively the same government services are not accurate. I would contend that senior citizens use less. For example they have no children in schools, less crime, less use of the roads. Kindly explain why the tax assessments and leavies increase exceed inflation. The suggestion that government services are the only basis for taxes is outragious because one is then suggestion that all services somehow have merit. Care to discuss the merits of Sound Transit, Public Schools, Justice Departments, Criminal Departments. Better yet, let's shorten the discussion to only those state and county agencies of merit. Number one on my list is the Fire Department. Care to add another?

My point is that politicians vote in programs and services that have little or no merit and from time to time the citizens vote on the latest handouts, excuse me, programs and services. Of course the citizens that directly benefit from the program or service will vote for it. The citizens that don't benefit from it will vote against it. Let's see, Death Tax, more yeas than nays, wonder why - maybe it has something to do with taxing the rich. And of course there are more voters under age 65 that believe that the grave is somewhere in the distant future. Tax the old rich person. Surprise when they move out of state to avoid the death tax. Let's get those smokers and drinkers and drivers, tax tobacco, booze and gas. They stink up the place and slur their words. Feels good, doesn't it. We are getting even for every time some smoker exhaled in our presence.

How about starting a biomass system to wean us off of petro from Iraq. Grow that corn. Nevermind that more petro is used to create less energy that is then pumped into the diesel. A minor detail. Let the chap from the monorail fiasco head it up. All in favor say I. The I's have it. It feels good to save Mother Earth from climate warming.

Now we have to tax to pay for all these golden boondoogles. Property, gas, B&O all sounds good. Better yet, don't call it a tax, call it a fee.

Assuming that government programs and services have merit is part of the problem. They most certainly do not have merit. As a senior I really don't want to pay for the ****ing anymore. I paid my share, your turn.

Posted by: Snuffy on January 14, 2007 11:04 PM

27. Mike S - your QED left out that other half of "fewer homes for sale", and that is fewer buyers for new homes, as all these people not selling are also not buying.

I do not see how this effects property values. The government does not get involved in private transactions.

The other advantage of limiting growth of taxes on property is that it restricts funds to the government. Why are all the other taxes increasing when over the past few years with property values doubling, the taxes are doubling and services are halfing. The government is getting a windfall profit. We should have a 'Windfall tax-rebate".

Posted by: Right said Fred on January 15, 2007 08:59 AM

28. I saw what happened in CA. This proposal would be a catastrophe. Stephen's example is good. Let's say 75% of the houses don't change hands but ever 30 years. That leaves the other 25% to absorb the ever increasing costs of government. If you believe the costs of government don't go up, you are an ignorant putz. How much of the cost of government consist of labor. Every year labor wants more money. Would you work for the same job year after year without a raise. No? Neither would government workers. That is called inflation. Those increasing costs must be paid by someone. Government costs too much, no doubt. But there are some services that are needed and others that are wanted. I don't want to live in a country with an uneducated populace. I want roads to drive on. I want police and fire and paramedics when I need them. I want someone to plow the roads so I can make it to work when it snows. I want someone to help ensure that the products I buy won't kill me because the manufacturer decided it was cheaper to use a plastic part instead of a metal part or hires people that don't know they need to wash their hands after going to the bathroom before making my sandwich. I know that I have responsibility, but I also need and want a government that provides those services that are essential. I don't want to live in a 3rd world country and I'm willing to pay for it. However, I'm not willing to pay for some lazy punk to sit around because him/her and work don't get along. I am willing to help support those that have mental or physical disabilities that need the communities support. I'm a dyed in the wool Republican, but some of the other Republicans sure like to carry the "someone else should pay for this" banner. I don't want my kids to be unable to afford a house because the property taxes are now double the mortgage payment at the beginning of the loan because some cheap suckers voted to have someone else pay for the cost of running government. Everyone should have to pay for running government. Even the elderly. They get to vote and they should have to pay for all those sweet programs they keep voting for. If you don't want to pay for the programs, don't keep voting for them. One last thing... Families with kids in school should have to pay something. It should come out of their pockets so they know that education is something of value. Here in the US, if something is free, it's felt that it isn't worth anything. If everyone had to pay something proportionate to their income, you would see a lot more folks pushing Johnny or Pedro to study instead of screwing off. Just my opinion.

Posted by: tomas on January 16, 2007 12:58 AM

29. It's a good proporsal for empty nesters who don't want to sell and for the building industry which will be called upon to increase supply to account for first-time buyers who can't afford existing homes.

Sounds like California to me! (Which isn't so bad. I like California.)

Posted by: DJ on January 16, 2007 11:25 AM

30. I don't see how it could be a good proposal for empty nesters. For those states that have no income tax such as Washington (thank God), the state politicians will cut back on essential services (police, roads and the like). Don't fool yourself into thinking they will cut the programs you don't like, they aren't that stupid. They know people will cough up the money for those expenses. Why do you think those are the only programs that seem to face the axe? You will never see them cut social services, healthcare, etc. That's not how the Dems operate.

Posted by: tomas on January 16, 2007 12:50 PM

Name:


Email Address:


URL:


Comments:

Remember info?