Although this should be obvious, I thought I’d spell it all out so that there is no confusion going forward.
First, the property tax is somewhat unique in that it is a tax on wealth — wealth as defined by the taxing authority. Aha, you might say — and some have — the IRS defines your income as well, and taxes you accordingly. Correct. And the income tax taxes that income — a tautology found in the very federal enabling legislation of the tax.
The property tax is an income tax as well. All taxes must be paid out of income. Your wealth — as defined by government — may set your property tax liability, but you still must pay that liability out of your actual income. Now do you see where we are headed?
Actual incomes across South Meck have fallen since the 2008 crash — we don’t know how much, but we know there has been a marked decline. But the reval will show an increase in wealth across the Southern tier — the value of most folks single largest asset, their house — since the 2003 reval. As a result the property tax liabilities in SoMeck will claim a much larger percentage of actual income than was previously the case — perhaps was ever the case.
Put another way, if you are making $100K and pay a 10 percent income tax and get an actual income boost to $125K you are not going to view the additional tax you pay as a tax hike. (So long as the tax rate does not go up.) You have more income out of which you can pay the tax. Not so with the 10 to 15 percent property tax hikes coming for many South Meck residents.
Their incomes have not increased, and may well have fallen, in recent years. As a result an additional $400, $800, or $1200 a year in property tax is going to feel like a massive hit on their incomes. Add in $3 to $4 gas and creeping inflation in food and you begin to understand the fear and upset.
It seems to me that local government officials and boosters are trying to talk themselves out of this reality — that local government just needs to “capture” a tiny slice of what has been a massive run up in wealth, that local taxpayers really won’t feel it or care, that the “vital services” charade will once again carry the day.
The problem is that crazed government spending during the boom years already threw away all that wealth.