Property Tax For Dummies: Part 2

Part two is hard to get started. Have you heard the news? The Governor of Kansas and candidate for Director of Health and Human Services is a tax cheat. (just go to any major news website and learn more about Governor Sebelius the tax cheat) We will get back to that later. The problem with property is there are far fewer home owners than renters. It is a simple process for the government to raise money via property tax. They simply raise the mill levy and or raise the value of your property on a annual basis; 112% in 10 years! Think about it, we are ready to lynch bankers for these types of profits. The tragic part, now many people who use to be able to afford purchasing a house cannot. The government for the most part doesn't have to go to the tax payer to ask for permission to raise property tax. Like all government they never give back what they take. As they raise property taxes they increase government spending. When the legislature or politician proposes cutting property taxes those in government who advocate spending your property tax, scream that your are cutting spending for the most needy. So here we are today in this bad economy where house prices are falling back to the levels than in many cases are more in line with their actual value. But the government is still sending out their appraisers with instructions to keep those values artificially inflated to keep those property taxes rolling in. They have increased government spending to the point that they know if values fall and taxes follow they will have to make extremely difficult decisions about cutting spending for those they have already made promises. They are not going to increase sales taxes. After all that hurts the poor and needy. So really to take care of the poor and needy, the schools, the fire departments, the police, the water treatment plants and on and on, it is the home owners paying the bill. Remember there are far more renters. Those who own property are footing this government spending. Yet it is the renters and those who don't own property who use most of these services. In closing, I have a friend who lives in a neighboring county here in Kansas. The taxes on his home doubled this past year. They went from $2,500.00 to nearly $5,000.00 in one year for goodness sake. That wasn't the mean old bank or a bad mortgage. That increase was simply due to an artificial increase in the mill levy and an annual appraisal of his property. That is a $208.00 monthly increase in his house payment. So much for the new car, braces for the kid or an increase to his 403B. Don't be a property tax dummy, go to propositionk.org and learn about a better property tax system for Kansas.

Where Property Tax Dollars are Typically Spent
2009 Budget

Property Taxes For Dummies!

I am amazed by the number of people who don't know what property taxes are. We hear about them all the time but even for some homeowners they don't have a clue. I have owned three houses in my life. It really wasn't until the 3rd that I paid really close attention. With the economy going bust and businesses closing it has become a real lesson in economics. But the most eye opening part of all is how the government manipulates the value of property to suite their needs. We need to pay very close attention to this issue. It cannot be more clear than during this economic crisis where you will witness what happens to state, county and city governments that artificially inflate property values when the bubble goes bust.

WHAT IS A PROPERTY TAX?

The property tax rate is often given as a percentage. It may also be expressed as a permille (amount of tax per thousand currency units of property value), which is also known as a millage rate or mill levy. (A mill is also one-thousandth of a currency unit.) To calculate the property tax, the authority will multiply the assessed value of the property by the mill rate and then divide by 1,000. For example, a property with an assessed value of US$ 500,000 located in a municipality with a mill rate of 20 mills would have a property tax bill of US$ 10,000.00 per year.

The government can manipulate this by two ways. They can keep the mill levy at a particular level and raise the property value of your home, based on an ANNUAL county appraisal. This is where government manipulation of the process became greedy. They can leave the mill levy constant and raise your appraised property value to increase revenue. Government can also increase the mill levy and increase the value and raise property tax a whole lot more.

Today city and county governments are strapped due to the bad economy and reduced taxes being collected. Yet they are still behaving as though the economic problems that affect you and I don't really affect them. After all, in the past when every government needed extra money they simply increased property values in Kansas. Not by a little but by a heck of a lot, 112% in the past ten years. Clearly, looking back at this pattern of raising values at such an unsistainable rate the stage was set for a collapse of the housing market. PLEASE COME BACK FOR PART 2. THE EFFECTS OF PROPERTY TAX GREED BY CITY AND COUNTY GOVERNMENTS.