Word: taxed
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...Truth is, a dysfunctional property-tax system has been haunting Florida, if not many other states, far longer than the recession has. Over the past generation, Florida's explosive but fecklessly managed growth drove up real estate values, and therefore property taxes, beyond the reach of more and more families. In the 1990s the state adopted a "homestead" measure which, when homeowners become eligible for it, caps their assessed property-value increases at 3% a year (part-time residents don't qualify). But when houses are sold, a far higher base assessment usually applies, creating absurd situations in which neighbors...
...lately the situation has gone from bad to, well, perverse. "One of the frustrating paradoxes of the recession is falling real estate markets and rising property taxes," says Kurt Wenner, research director at Florida Tax Watch in Tallahassee. A 2008 state reform, as well as another scheduled to go into effect next year, has reduced some of Florida's property-tax burden by making the cap more generous and accessible to more residents. But because of arcane provisions in the homestead law, government appraisers can tell a homeowner that although his house's current market value may be as depressed...
...element of confusion, if not contention, is the tax bill due on dramatically discounted homes bought at foreclosure auctions. Those purchases, which represent about 40% of new home purchases in Florida now, are driving any home-sale revival the U.S. is seeing (even if they also help drive down surrounding home prices). But in many if not most cases, people buying foreclosed homes have budgets "that can afford the taxes on a $100,000 house but not necessarily a $400,000 house," notes Brian Paul, CEO of the Realtors Association of the Palm Beaches. Of course, Palm Beach County executives...
...course, homeowners can appeal to their county's value-adjustment boards to negotiate lower assessments. And real estate experts like Paul say onerous tax bills aren't proving too large a hindrance to foreclosed-home purchases. The bigger concern is that during the boom, many local governments spent their revenue windfalls like sailors, which makes taxpayers less sympathetic to their budget whining. Mayor Alvarez insisted this month that "it's almost impossible that we can achieve an acceptable budget" without a property-tax increase. But because Miami-Dade residents saw so much official profligacy during the housing bubble - county commissioners...
There's just no way to square the cost of current recession-fighting efforts, future Medicare commitments and the various goals of the Obama Administration with the current level of taxation. Taxes are going to have to go up, and raising rates on just the very richest won't be enough. The only alternative is what some call the inflation tax--reducing the relative size of the country's debts by letting prices rise across the board. But that has its costs too. The free-lunch era is over...