Hoboken Property Taxes “Revaluated” – Now what?
Property taxes, and taxes in general, has always been and will forever be a source of contention in this world. Just, or unjust. Fair, or unfair. Necessary, or unnecessary. We could debate it until we’re all blue in the face. Do we accept status quo? Or challenge the concept entirely? Is it even possible to get the public on the same page for this exceedingly complicated facet of society?
Either way – Hoboken recently went through this big “revaluation” of properties in town. As you can see from the Excel spreadsheet below – the total “assessed” value of properties in town rose dramatically over 350% from over $3 billion dollars to nearly $11 billion dollars. However, that doesn’t mean that your property taxes are increasing by that amount, because the estimated tax rate will be adjusted accordingly provided there is no “tax increase.”
The assessment model was switched to “fair market value.”
Play around with the numbers (in the red boxes) if you wish…
Are market value property taxes even “fair” in Hoboken?
Here’s a simple example of how “FMV” property taxes are absolutely flawed:
Take John, who saved his money and lived within his means. He was able to buy a luxury 2 Bed 2 Bath condo at Maxwell Place assessed at $1.5 million. His new 2014 tax rate will be slightly over $20,000 per year.
Then, take Katie and Susie, the lesbian couple with an adopted child “Odin” in the Hoboken public school system. They also have a 2 Bed 2 Bath condo with the exact same square footage in a lesser neighborhood on the west side of town. Their assessment is only $400,000 – and their tax rate is just over $5,000 per year.
Kate, Susie and Odin use much more of the city than John. They leave diapers in the playgrounds, use the toilets much more, and even get the Hoboken Fire Department to rush to their apartment twice a year as Odin was so “cute” when he learned how to dial 911 on the phone. Why should John pay nearly four times as much?
Always someone with the short end of the stick.
Alternative property taxes?
For the sake of argument, let’s say we absolutely need property taxes – they’re a necessity. Are there fairer methodologies?
- Underlying Land Value – If we keep the tax strictly to the value of the land – this will promote owners to improve their properties. Now in Hoboken, someone will be apprehensive to make improvements – because they will fear their property taxes will go up too! This could result in degenerating neighborhoods.
- Income generating properties only – If your land or property produces income, the city (and/or County) can levy a small tax on that. Maybe if the local governments can keep the costs of their programs within the tax revenues produced – it’d be like everyone else who has to “live within their means.” Like for instance, why does the Mayor need an “aide” anyway?
- A la Carte services? – In my example above, why does John have to pay for our low-ranked school system with no kids? What about parents who send kids to private schools?
In the end – I think this “fair market value” system will turn out to be a disaster. Especially since it’s tied to a VERY unstable and fluctuating Real Estate market. What will happen later in 2014 when another bubble bursts? It’s going to be a logistical NIGHTMARE for city hall. Good luck with that!
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