The Tribune’s False Tax Analysis

I read with interest Jerome Stockfisch’s article about a state income tax in yesterday’s Tampa Tribune.

The article starts with a box on page one essentially saying that a homeowner who pays $3000 annually for property taxes could instead pay only $2870 if we reduced property taxes and imposed a minor income tax. Sounds great, right? So what would it take for a citizen to reap this $11 per month windfall?

First of all, the important numbers in the article:
• The $3000 current annual property tax
• The $800 new state income tax
• The $2070 new annual property tax
• The $2870 new, reduced annual tax paid (property plus income)

Let’s start with the annual property tax. For a homeowner to be paying approximately $3000 annually right now in Hillsborough County, the taxable value on their home would need to be around $150,000. Assume that they have the homestead exemption and they are taxed on $125,000. Obviously, the millage rate varies, but let’s take a number like 22 mills. This would yield an annual charge for ad valorem taxes of $2,767.66. Add to that $337.00 in non-ad valorem taxes and you get $3,105.35. Close enough to the article for the purposes of this discussion (I used real numbers from a real house in Hillsborough County).

Now that the math is out of the way, let’s look at reality. The house I used was purchased several years ago. A family with two children and two incomes who purchased the same house today would incur significantly higher taxes. Due to the inflated real estate market, that house would likely cost a new buyer $317,000 (based on a similar home sold three doors away). Thus, a young family purchasing the same home today would be taxed at twice the rate. They therefore would pay $6,434.51 (assume they homestead the property) in ad valorem taxes.

I think this is a much more likely scenario. Stockfisch’s $150,000 taxable value seems unrealistic. Anyone who has looked at the housing market in Tampa can verify that.

Next, let’s turn to the earnings. The article discusses a household earning $55,000 per year. Most families I know need two incomes at this level to make ends meet. The common scenario of two wage earners would easily put the family paying more. Let’s just assume that the spouse earns $35,000 per year. Even at a two percent tax rate, that costs the family another $700 per year. Likely $35,000 plus $55,000 ($90,000) would put the family in the “upper income” bracket that the article tells us would be three percent. Now we’re at an additional $1050 per year. Add that to the articles new, improved $2,870 per year and you get $3,920!

This rant has already gone further than I had wanted, so I won’t even bring up the fact that a state income tax would also require the state to create infrastructure, hire employees for administration and enforcement, etc. I also won’t mention the additional burden to the tax payer to file for something they currently don’t do each year. Or employers to report earnings to the state. Or for employers to withhold earnings for the state income tax…

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5 Responses to The Tribune’s False Tax Analysis

  1. Rich says:

    I read that article, and was thinking to myself, why would any writer spend this much time writing about something that roughly 80% of floridians dont want, including the many who move here b/c of the sunshine and the lack of income tax.

    Answer, as a liberal columnist, he really wishes we had one.

    Me, I wish we would eliminate all taxes on achievement, which include income tax and property tax, and simply have a very broad sales tax on all retail purchases except groceries and medicine. With NO other exemptions, the sales tax would be about 9.5% to 10%, and be fair to all, including the poor since it exempts food n medicine.

    We would be the tax haven of the country.

  2. Nice blog Darren… found you on my Google email for ‘Tampa Real Estate.’

    The press has just gone crazy over the last few days about this and local politicians are driving the hysteria.

    Want to know what’s wrong with property taxes?

    Linda Saul Sena lives in a mansion on Davis Island that would sell for around 1.2M today.

    She pays under $6000 in property taxes.

    Some on who buys a $300,000 townhome South of Gandy today will pay more in taxes than Linda Saul Sena under our current program.

    It’s rediculous and the Trib article just shows how out of touch the non-payers of property tax are regarding our current system.

    Also… a cursory search of Hillsborough Country tax records indicates Jerome Stockfisch doesn’t even own a home… I guess that makes him unbiased.

  3. Jim Johnson says:

    Hey Robert – No Stockfish in Pasco or Pinellas Property Appraiser searches either.

    Do you think the proposed solution will work?

    Sure, property taxes will be cut – but there will be some ramifications: cuts to the zoning and permitting functions, meaning it will take longer to build or do major renovations, and an increase in impact fees, making homes more expensive than they are now.

    In this, there is no win-win situation. Just that one side – the taxpayers – will come out further ahead.

  4. In both cases… these additional expenses are one time and non-recurring.

    Let’s say it costs an additional $2500 for permits or impact fees.

    In terms of real affordability that amounts to around $14 on a month for a new home buyer, or around $21 a month for someone taking out an equity loan for the renovations. In addition, if the buyer pays off the loan the expense is gone at some point.

    Compare this to a tax bill around $500/mo for the typical home buyer in the Tampa market.

    Last year, in a slowing market, City of Tampa property tax revenues *increased* by $22 Million and under the current system will increase again! It’s simply not defensible.

    *cuts to the zoning and permitting functions, meaning it will take longer to build or do major renovations

    *and an increase in impact fees, making homes more expensive than they are now.

  5. Chuck Palm says:

    Well put, my friend, your math skills stun me! I must admit, this fiasco is not getting enough common sense coverage in the FL media, we’ll have to be the voice of reason and keep the publc aware!

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