Property Taxes versus Income Taxes

[livingdeb]

Speaking of being whiny, I've discovered that property taxes are huge in Texas. But we don't have income taxes. How does that compare?

Last year my property taxes came out to 2.23% of the appraised value of my house. One rule of thumb is that you can afford a house that is three times your income. So 2.23% of house value is roughly equivalent to 6.69% of income.

So I thought I'd look at this list of tax brackets by state for incomes of 1/3 the appraised value of my house. Of course you don't necessarily pay the marginal rate on your entire income. I get these rate ranges for incomes between $0 and 1/3 the value of my house (married) for places that charge income tax:

2.00 - 6.00% Alabama
2.59 - 3.36% Arizona
1.00 - 7.00% Arkansas
1.00 - 6.00% California
4.63 - 4.63% Colorado
3.00 - 5.00% Connecticut
2.20 - 6.95% Delaware
4.00 - 6.00% District of Columbia
1.00 - 6.00% Georgia
1.40 - 7.60% Hawaii
1.60 - 7.80% Idaho
5.00 - 5.00% Illinois
3.40 - 3.40% Indiana
0.36 - 7.92% Iowa
3.50 - 6.45% Kansas
2.00 - 5.80% Kentucky
2.00 - 4.00% Louisiana
2.00 - 8.50% Maine
2.00 - 4.75% Maryland
5.30 - 5.30% Massachusetts
4.35 - 4.35% Michigan
5.35 - 7.05% Minnesota
3.00 - 5.00% Mississippi
1.50 - 6.00% Missouri
1.00 - 6.90% Montana
2.56 - 6.84% Nebraska
5.00 - 5.00% New Hampshire
1.40 - 3.50% New Jersey
1.70 - 4.90% New Mexico
4.00 - 6.85% New York
6.00 - 7.00% North Carolina
1.84 - 3.44% North Dakota
0.59 - ? Ohio
0.50 - 5.50% Oklahoma
5.00 - 9.00% Oregon
3.00 - 3.00% Pennsylvania
3.75 - 4.75% Rhode Island
0.00 - 7.00% South Carolina
6.00 - 6.00% Tennessee
5.00 - 5.00% Utah
3.55 - 6.80% Vermont
2.00 - 5.75% Virginia
3.00 - 6.50% West Virginia
4.60 - 6.50% Wisconsin

Mostly a little lower, but comparable. Of course the above table doesn't show you how fast you get to the higher brackets (except for states with a flat tax) nor how many deductions you get to have. But these states probably also have property taxes in addition. Plus the forms you need for income tax have to be annoying. So I'm just going to be perfectly fine with my high property taxes.

(Let's not go into how my property value--and thus property taxes--grew faster than my income even before I quit my good job and my neighborhood started getting gentrified.)

Comments

[texpenguin.livejournal.com]

We have income tax and very high property tax. Our property here is maybe 1/2 of what we had in TX, but we pay more in property taxes. Don't know how annoying the income tax forms are though, because we finally got smart and hired someone else to do our taxes!

[livingdeb.livejournal.com]

Half? I thought even your house in the semi-affordable area would be quite pricy compared to your old house.

Lots of taxes! And they don't all go to housing prisoners like they do in Texas. I don't know if it's still true, but when I was a kid, the two best school districts I lived in were the one in California (though it was near Sacramento) and the one in League City, TX (with all the kids of parents who worked at NASA). Plus I had a good magnet school in the Houston ISD. Do y'all have amazing libraries? Or can you see other evidence of benefits from your huge taxes? Or is it probably all eaten up with theft?

On hiring someone to do your taxes--mwahaha! My experience in the tax class leads me to believe that once you've done your federal income taxes, you just copy a few numbers over into the state income tax form for most states. So it might not be that crazy. TurboTax does cost more to do that, though.

[texpenguin.livejournal.com]

I think you misunderstand. The size of my house/property is half what I had in TX, but cost me three times as much. Of course taxes are based on the cost, no matter how out of line those costs are with the size of the property. Life here is roughly identical to life in Austin. Road construction is just as bad, crime rates a bit higher, nothing special libraries and other services, DMV services way worse, but more museums here, etc etc. Our sales tax rate seems to be 12% too, almost 4% higher than Austin. There are a LOT of very highly rated school districts here (because of all the rich tech company exec's kids) but of course that doesn't matter to me. We do have a lot of nice parks and trails, so at least there's that.

As for doing taxes, we did our own for years, including when Todd was self-employed, and when I had my little jewelry company, and it royally sucked every single time. We decided we just didn't want to deal with that stress anymore. We hired a friend who is extremely good at what she does and is extremely trustworthy to take care of them for us going forward. We didn't want to deal with all the implications of house sales and purchases, stock options, stock grants, 401ks, etc.

[livingdeb.livejournal.com]

Ah, half the size, three times the cost--that's more what I expected. Loads of taxes, wow!

I'm glad you have a good and trustworthy friend to hand over your taxes to. All those tax issues you have add up!