Mark McDonald reports a recent development in the brewing controversy over Philly's property taxes in today's Daily News. Though I am sure you've been following this brouhaha closely, we'll just take a minute to offer a simple backgrounder on the issue.
1) The thing about Philadelphia property taxes (as with property taxes in a lot of places) is that they aren't based on real "market values." They are based on some other number that's usually a lot less than what your house would acutally sell for.
2) This leads to one thing: Poor folks get gypped.
3 That's because houses that are worth little usually have market values on their tax bills that are closer to what the house would actually fetch in a sale. Expensive houses usually have values that are much lower than what the house would sell for. Expensive stuff appreciates, after all.
4) But that means poor folks are actually paying a higher tax rate than rich folks.
5) To protest, Philadelphia Forward wants everyone to appeal their tax bills. The tax crusaders also are mulling a lawsuit, as Mark reported today.
6) This problem would go away if the city moved to that "full vaulation" thing that people don't completely understand (it means what it sounds like: basing your tax bill on the full value of your house). But lots of tax bills could go up, in that case.
7) Michael Nutter says he supports a "fair and accurate citywide property reassessment," though he also supports a homestead exemption, which you should support too if you live in Philly now. It could cap your tax bill to prevent it from skyrocketing.
See, isn't that simple?
Comments (11)
Wendy
Please explain #3. What's the difference between what a house is worth and its market value?
Posted by mbowers@dealersedge.com | September 26, 2007 1:30 PM
How will full valuation deal with situations where a house is transferred for $1, as is typical in cases where a family member sells to another family member? and how will things like market declines be handled? Do you really think that the city will reduce your home's full market valuation in the event of a real estate slump?
Posted by Jay | September 26, 2007 1:37 PM
I disagree that the houses of the poor are closer in value to the sale price.
Some of these assessed values are like $5,000. The houses sell easily at Sheriff sale for ten times that, twenty times that.
My house is assessed at about five time less than real market value, and this is typical of a $500,000 house. The poor get a huge discount compared to what my assessed value is. They haven't had their properties assessed in years, back when the properties were less than the value of the parts.
Philly's property was deeply undervalued by crime and drugs. That's not the case so much anymore, as drugs and crime are more concentrated into certain areas, and driven out of areas where newbies are coming in. So properties that had what you should likely think of as a negative value (less than the cost of the footprint) have a real market value more in line with the national and regional average.
Full market value is going to bring them up to contributing to their fair share of their costs in real today money.
I'd gladly pay taxes on full market valuation just to make my neighbors who inherited the properties they've lived in their entire lives, never paid rent or a mortgage have to complain that their tax bills are going up to oh, horrors, more every year. They pay almost nothing as it is.
There has to be a fair adjustment of too low values that haven't existed in decades, for costs that had to paid long ago by the city.
My taxes as a newbie, (yes, with a partial abatement) are nearly $2000 a year.
I'm happy to pay it because I want to have schools that create self-sustaining citizens and pay for enough police and enough quality prison space that addresses recidivism.
But I'm disgusted with my neighbors who are lifers who don't even try to pay, but BS the city with tales of woe. Meanwhile, they have costly toys, motorcycles, ATVs, SUVs, spend like crazy on shoes, clothes, hair, wigs, etc.
Some owe huge amounts of back taxes back from when taxes were incredibly cheap and think that they are smart for not paying property taxes. It's grotesque.
Someone has to be courageous enough to say your not paying taxes are the reasons schools are bad, and the murder rate out of control. Can anyone risk being honest?
Yet these are the folks at the community meetings crying about how hard it is to pay property taxes, how the newcomers are gentrifying the place. Meanwhile, the newcomers are the only significant source of new property tax revenue that pays their highly government subsidized lifestyle, if you'll forgive me for being honest.
We should oppose the overuse of the non-arms length transfer. People fraudulently pose as relatives to get a house for $1, then pay cash under the table.
Perhaps an advertising campaign that states good schools = property taxes paid on time in full.
Nutter needs a working group that focuses on how to build the tax base. That means, yes, some people are going to pay property taxes in real time on real value.
Posted by Anonymous | September 26, 2007 6:23 PM
People have no clue how much it costs the city to maintain them.
It's way more than $1000 a year. And everyone who owns a house should have some kind of minimum regardless. That's going to make for a way more than 10% increase.
That's going to be a 200% to 400% increase for huge swaths of the city just to get everyone to a fair minimum.
These owners are the incidentally, where city costs are highest. These owners are the costliest of all owners. So it's only normal that the freight goes up according to costs. How much more are we going to drive out the middle class and upper mid tax base?
So I don't get the "save the poor owner" shpiel. The lower income owners are still owners. They have a house that has to exist in a city that costs money now.
Everyone must contribute their fair share. Or rent. Why not? Is it the job of the city government to prevent home owners from paying property taxes in real money for as long as possible?
Posted by Anonymous | September 26, 2007 6:32 PM
Every owner has to pay. Every nonprofit needs commonly accepted documentation that is current, or else immediate foreclosure. Every city agency holding property that owes has to auction in a competitive open process. The RDA and the city hold property out of the property tax base and won't take property back that they transferred to "affordable housing" builders who haven't moved to do anything with the properties. This decimates schools and creates blight.
Look at the "Royal Theater." Royal vacant building for ten years. Look at all this property the RDA gave out for less than market value, and where is the forward motion? Nutter has to empower the RDA to take back and aution all property that never got built after two years.
We have to let the private market do what it can, instead of having expensive local city agencies try to do what the marketplace will do for free.
That way there doesn't have to be sharp property tax increases annually.
Every gas and water lien above $1000 should trigger autoforeclosure. I can't afford increases for this "bad debt" that is collected just as soon as the property sells. A new owner comes in and starts paying current market value property taxes.
Rather than try to prevent sales of property or foreclosure of any kind, the city has to allow it to happen. All debts are paid at the closing, let's not forget.
Mortgage foreclosure, property tax foreclosure, all this results in all the lien debt such as gas and water bills paid off, and typically these are the biggest overdue bills.
Property taxes have to be collected in full or heavily fined or else it's just a low interest loan for the mayor's deadbeat relatives and their ilk.
Does it really help these grown men to live like children? Are we using a separate but equal collection policy?
Sharif Street gets teary for good schools, but the best thing he can do for schools is not depend on his father to pay his property taxes whenever the press gets on him. He has to do what I do -- pay in full and on time. That's how not to cut critical school personnel THIS school year.
John Street's property tax debt could have paid for one half of the salary of a part-time classroom aide. Those got gutted mercilessly.
The paper has to get on all of the scofflaws, hard. We don't live in an socialist society, where the government pays for everything. We live in a country where schools and local infrastructure are paid by those who own property.
Let's build a tax base, and not decimate it. Fair taxation based on value will cause people who own to step up or sell out.
Posted by Anonymous | September 26, 2007 6:38 PM
I hope that before taxes are raised in any significant way, that the overdue property taxes are collected first from EVERYONE who owes.
My recommendations to Mike Nutter: Collect the easy stuff now.
In www.hallwatch.org's list of top 100 property tax delinquents you have some easy pickins':
#70 on the list: SECRETARY OF HUD $169,225.12 40 properties total owe city property taxes of almost 170,000 bucks.
Don't wait for the feds to get around to it -- foreclose on all 40 properties and auction them at sheriff sale. They get new owners who pay taxes in today's rates, and the old taxes are paid off.
Posted by Anonymous | September 26, 2007 6:51 PM
Recommendations to Nutter:
Openly auction the followinng to collect overdue taxes for hard cash and new paying owners:
#1 in debt REDEV AUTH OF PHILA $18,054,352.37 904 properties owe $18 million (at least) in overdue property taxes.
Sell this stuff openly in a competitive auction, not in the closed door, back room dealings with generous democrats.
Result? Immediate hard cash payoff, and brand new owners paying in full each year in latest value taxes.
Posted by Anonymous | September 26, 2007 6:54 PM
#2 on prop tax scofflaw list: PHILADELPHIA INDUSTRIAL DEVELOPMENT or PAID owes $5,360,613.38 on 57.
Auction openly at once to highest bidder. Collect $5 million. Give $2.5 million of that to schools.
Posted by Anonymous | September 26, 2007 6:56 PM
The City is #3, #4, and #9 in delinquent property taxes by mailing address.
Nutter -- authorize liquidation again either at sheriff auction or other open competitive auction to the highest bidder to pay old debts on water, gas, and property taxes:
#3 CITY OF PHILA at this zip code 19103-2028-1600 owes $2,220,908.23 on 126 properties.
#4 CITY OF PHILA at this zip 19102-1604-1401 owes $2,026,330.54 on 557 properties.
9 CITY OF PHILA here 19102-1617-1401 owes $827,564.49 on 201 properties.
So why is the city holding this property off the market and out of the property tax base so critical to schools and safety?
Recommend to Nutter to auction this property asap.
About 1000 properties go from blighted to fresh new owners who pay property taxes that weren't before.
Posted by Anonymous | September 26, 2007 7:01 PM
Collect from multiple property owners all overdue taxes: amount hundreds of millions.
Anyone who owns more than one property should have one year to pay in full or face prompt sheriff sale.
By definition they have the means to pay property taxes.
Before raising taxes, let's collect from these owners, who make up most of the Top 100 Property Tax Deadbeats List on hallwatch.org.
Fair taxation starts with impartial collection.
Posted by Anonymous | September 26, 2007 7:06 PM
Mbowers, the city calls it "market value" on your tax bill, but it never tried to make it an actual market value since about 1950.
Hence the use of the terms (only in Philly) of real market value versus city assessed market value.
Posted by Anonymous | September 26, 2007 7:08 PM