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Friday, February 11, 2011

A Headline Says Six a Thousand Words

Posted by on Fri, Feb 11, 2011 at 3:52 PM

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Read the headline on the front page of the print edition of this morning's Seattle Times, and you might get angry. "FALLING HOME VALUES, RISING TAX BILLS" the bold typeface screams. And the text of the online headline, in its specificity, is possibly even more inflammatory: "King County property tax going up as home prices fall."

Government hiking our property tax bills? In the middle of a real estate bust? Damn you tax-and-spend Democrats!!! Why can't you live within your means, and get off our backs?!

But read just a little bit further—like say, the first few paragraphs—and you get an entirely different story:

Declining property values will bring tax relief to some King County homeowners this year, but voter-approved levies and bonds will mean higher taxes for others.

Oh. So contrary to the headline, many homeowners whose property fell in value will see their property taxes go down. Huh.

In Seattle, where voters last year approved two school levies and construction bonds and home values rose a tad, the tax bill on a typical $453,300 house will rise by $324, or 8 percent, to $4,379.

And here in Seattle, where property taxes will rise on average, it's only due to widely popular, voter approved school levies, and a recovering real estate market. Okay. I guess that's no so bad then. Sorry, government, for jumping to conclusions. Have a nice day.

Problem is, a lot of readers won't get much past the headline, so they'll never learn that the article itself pretty much says the opposite. And for those who do, their impression of the article will be unavoidably shaped by the intentionally provocative headline that precedes it.

I've been repeatedly told by folks at the Seattle Times that there is a firewall between editorial and news, but you certainly wouldn't know it from the headlines. For example, compare their fit of very intentional framing with the dare I say unbiased headline in the Issaquah Press on their article covering the exact same subject: "Issaquah school levies buoy property tax bills as values decline."

Admittedly dry, but informative. And accurate.

The most frustrating thing about all this is that there actually is a pretty good story to tell here, but it's not the story the Seattle Times' editors presumably want to tell. The real story is not about whether property taxes are rising or falling relative to the fluctuating price of housing, but rather that most taxpayers are under the mistaken impression that the two are closely related at all.

The majority of homeowners expected, and understandably so, that if their property values fell, their property taxes would fall with them. And it is this assumption on which the Seattle Times headline is predicated. (See... it's the opposite of what you expect! Outrageous!) But the fact is, outside the passage or expiration of voter approved levies, your property taxes only generally rise or fall if your property value rises or falls relative to the average property value within the rest of the taxing district.

The Seattle Times article makes a passing reference to this, by explaining that Washington state uses a "budget-based" taxing system. Unfortunately, they don't actually explain the budget-based system correctly. The Issaquah Press, on the other hand, well, they actually make a pretty good start:

Washington operates under a budget-based property tax system, meaning local taxing districts — including fire, library and school districts — submit annual adopted budgets to the county assessor.

The assessor then has the responsibility to determine the necessary taxing [rate] to meet the adopted budgets.

So, let's say a school levy is for $10 million a year. The county assessor adds up all the value within the taxing district, and then sets a rate that would generate $10 million. If the average property value falls, the rate goes up. If the average property value rises, the rate falls. Either way, your school district gets $10 million.

And since everybody in the same taxing district is charged the same rate, if your own home values falls, your property tax only falls if your value has fallen further, on average, than the rest of the district. That's why, all other things being equal, it is very possible for your property tax to rise even as your home value falls. And if it does, you should be thrilled: it means your home is retaining its value better than your neighbors'.

Complicated, tedious, mathematical stuff, I know. And I don't really expect your typical daily newspaper to take the time to explain it, year after year, every time the property tax bills come due.

But what I do expect is for our paper of record to resist the urge to exploit the public's lack of understanding of budget-based taxation, in the cynical service of inflaming passions against local government.

 

Comments (11) RSS

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Will in Seattle 1
Next up, anti-tax protesters demand more services!
Posted by Will in Seattle http://www.facebook.com/WillSeattle on February 11, 2011 at 4:14 PM
Keister Button 2
I see a graphic and a blockquote in which The Seattle Times mentions "the tax bill on a typical $453,300 house." My knowledge of assessments on properties within King County is that the house has an assessment value and the land has an assessment value for detached single family homes. In a mix of condominiums, apartment buildings and SFHs, someone with a "typical $453,300" house has a luxury condominium, or pricier land for a higher assessment.

I guess listing a typical composite assessment rather than the building value assessment would be disingenuous or too difficult for Seattle Times staff.
Posted by Keister Button on February 11, 2011 at 4:38 PM
Fnarf 3
Thank you, dear Goldy, thank you.
Posted by Fnarf http://www.facebook.com/fnarf on February 11, 2011 at 5:17 PM
Supreme Ruler Of The Universe 4

Since you're on one of my favorite themes -- property tax in WA state, perhaps some time you could cover the unfairness of the covenants which restrict the rise in property tax for long time residents versus newcomers.

Property tax is what should be being used for the states mainstays such as "transit" instead of sales and income taxes and fees -- that fall harshly on the productive person, while letting the idle North Westerner live in splendor.
Posted by Supreme Ruler Of The Universe http://yrihf.com on February 11, 2011 at 6:45 PM
5
Supreme @4,

But we don't have those sort of covenants here. That's a California thing that our state constitution forbids.
Posted by Goldy on February 11, 2011 at 6:47 PM
Supreme Ruler Of The Universe 6
#5.

Well, maybe you're right...I was thinking of the 1 percent limit, but that is for an overall tax increase, not on individual homes.

Still, I look at similar homes around this area in Zillow and Redfin and see wildly divergent tax rates.

According to this (http://dor.wa.gov/content/getaformorpubl…), Washington is somewhere in the middle when it comes to property taxes...however, they also demand premium Government services similar to high density Eastern states.

The insiders asking people to pay based on income or sales, while sitting on the larger tracts of land and assets is wrong in my opinion....

Q. How do property taxes stack up against personal income and taxes in other states?

Property taxes relative to income have varied over the years but over time have kept in line with personal incomes. In 2005, the most recent year for which national comparisons are available, Washingtonians paid $30.60 in property taxes per $1,000 of personal income. At that time, Washington ranked 28th highest among the states. In 1995, property taxes were $36.30 per $1,000 for a ranking of 24th highest. In 1985, they were $32.59 per $1,000 of personal income, or 24th-highest in national ranking. Thus, Washington usually ranks halfway between the highest and lowest states in property taxes relative to income.


Posted by Supreme Ruler Of The Universe http://yrihf.com on February 11, 2011 at 7:00 PM
7
Thank you for writing this story!

Just one bit that isn't quite accurate: "And if it does, you should be thrilled: it means your home is retaining its value better than your neighbors'"

It might be true in some instances that a change in tax-assessed value relative to your district is because of a real change in value of your home relative to your district (like if, say, condos are holding their value better than stand-alone homes, and yours is a condo), but not generally. Because the assessor's office doesn't frequently (only sometimes) come by, do a personal walk-through, and determine an accurate value for every home every year based on market trends, etc., a change in your assessed value relative to others in your district is more likely going to be due to any permits you filed for home improvements, or a determination that homes like yours (ex: homes in your neighborhood) were previously tax-assessed too low, and the assessor's office decided to raise them all.
Posted by G g on February 11, 2011 at 8:37 PM
Dr_Awesome 8
There's no getting through to some people. I sent a link to the recent story about the Pierce County Transit tax increase failing at the polls to a conservative friend of mine what lives in Tacoma. I noted that the tax increase was miniscule, less than the cost of a latte.

My conservative friend replied "Yeah, that's too bad, but OUR TAXES ARE TOO HIGH!".

I followed up by asking about the increased costs my friend and other Pierce County residents will pay as those two hundred workers collect unemployment, food stamps, and so on. My conservative friend repeated that it was heartbreaking, but OUR TAXES ARE STILL TOO HIGH!"

Since my friend is also out of work, I asked whether my friend appreciates having two hundred more people competing for the jobs he is applying for. His reply (no surprise) "That's terrible, but OUR TAXES ARE STILL TOO HIGH!"

Posted by Dr_Awesome on February 11, 2011 at 9:25 PM
9
This happens all over the media, all the time - headlines, pictures and large-type excerpts say one thing (which is conservative) while the story says another thing to those who actually bother to read it (which is liberal). The reason is simple: the reporter who wrote the article is a reality based liberal, while the editor who arranged the presentation is a conservative who wants his taxes decreased, never mind who gets hurt.
Posted by I have always been... east coaster on February 12, 2011 at 11:11 AM
10
@1, see Krugman's account of this:
http://krugman.blogs.nytimes.com/2011/02…
Posted by Mike OC on February 12, 2011 at 11:11 AM
watchout5 11
Those damn bureaucrats doing the things we gave them permission to do when we voted for them. Who would have ever guessed that property taxes help pay for the government, and that the government needs different amounts of money each year based on the problems we ask them to fix. It's almost like we setup some kind of percentage system, will the Seattle Times be explaining to everyone what a percentage is? I'm still so confused and just so angry that the people we agreed to pay taxes too keep taking them out every year. I thought this was a one time deal?
Posted by watchout5 http://www.overclockeddrama.com on February 13, 2011 at 1:20 AM

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