Bacon's Rebellion

NVA’s Homestead Act

—

by

James A. Bacon
in

In response to the soaring property values in his Arlington District and all of Northern Virginia, Del. Bob Brink (D) has proposed an amendment to the Virginia constitution allowing a “homestead” exemption. HJ 820

Authorizes the General Assembly to enact legislation that will permit localities to exempt from property taxes up to the first $100,000 of value of real estate designed for continuous habitation, owned and occupied by the same individuals as their dwelling.

Brink argues this will give homeowners relief and equalize the tax burden between residential and commercial property.

Share this article

ADVERTISEMENT

(comments below)

Comments

Comments

  1. Jim Bacon Avatar
    Jim Bacon

    I totally sympathise with homeowners whose property taxes are escalating at a rate much faster than that of inflation. But I distrust gimmics such as the one Brink proposes. It deals with the symptom, not the underlying cause. The underlying cause is twofold: the unwillingess or inability (given state constitutional restrictions on what they can do) of local governments to re-engineer their business processes, and their unwillingness to address dysfunctional human settlement patterns.

    If deprived of revenue from one source, local governments will just raise it from another source. Push in the balloon here, and it pooches out there. Until state/local government gets serious about wringing out unnecessary costs, pressure on taxpayers will continue to escalate in one form or another.

  2. Anonymous Avatar
    Anonymous

    Although the implications get gnarly pretty fast, the reality is that the residential property tax should be abolished. Full Stop. It is an artifact from more simple times when ad valorem taxation could be managed rather easily by local governments. I confess that I can’t play out all the additional effects, but it strikes me that so substantial a tax on unrealized wealth must be inefficient to administer and has nasty impacts on seniors etc. etc. For politicians, particularly the dominant Virginia species, it takes a special fortitude to talk about this becasue these taxes would have to be replaced to a substantial degree with income taxes, either collected locally or by the state and remitted to localities. There are tough issues about local control and preventing leakage as the money passes through Richmond. As brain dead as our politicos seem to be about these issues, I could see them swarming to repeal or restriction of the property tax while failing to put responsible alternatives in place.

  3. Anonymous Avatar
    Anonymous

    When I pay my “real eatate tax” it comes out of my income, when I pay my “sales tax” it comes out of my income, when I pay my “property tax”, it comes out of my income, when I pay my “self employment tax” it comes out of my income, when I pay my “employee’s taxes” it comes out of my income.

    Meanwhile politicos keep deluding themselves that they will find “another source of revenue”.

    There is only one source of revenue and it is income which depends on commerce. Commerce depends on roads. Want more income, build more roads.

    It matters not if the rate of increase is higher than inflation, it matters if it is higher than the rate of increase of income. I am skilled, and I build a lot of my own stuff. Pretty soon I will have built myself out of my ability to keep it. What is wrong with that system?

    I think there should only be income tax, or only sales tax, take your pick. All of that money should go to your town. If the county wants some, they can go bug the town instead of bugging me. If the state wants some thay can get it from the county, instead of bugging me.

    Getting rid of all the multinefarious means of collecting taxes would go a long way to wringing costs out of government, and they could stop playing ballons.

    Incidentally, my settlement pattern would appear to be outright nuts, but it makes perfect sense to me for reasons that the government will never be privy to, let alone able to fathom if they were. It is also economically rational. Eventually I plan to make my pattern less dydfunctional, but it turns out that is a five year project that is going to cost me a couple hundred thousand to implement in an economically effective manner.

    I don’t think the government or anyone else is smart enough to decide what settlement patterns are dysfunctional, given that millions of idividuals have caused those patterns and are simultaneously changing those patterns as fast as they can.

    One comment on the recent reality check planning exercise was that they checked reality at the door. No one is going to buy the plans proposed, and government can’t make them work anyway. More transit oriented development? Have these guys ridden a train lately?

    Sure, lets spend another $40 billion on rail that doesn’t meet anybody’s needs, that’ll keep our tax(es) down.

    Ray Hyde
    Delaplane, VA

  4. Barnie Day Avatar
    Barnie Day

    If the good folks of the Peoples Republic of Arlington think their local taxes are too high, then they should sack their board of supervisors and elect supervisors who will lower and/or redistribute them.

    But wait a minute! Rut-row! There could be a resulting cut in services! Now what will we do?

    Hmmm. I’ve got it! Let’s take our local problems down to Richmond! Maybe they could help us figure out a way to cut taxes and simultaneously maintain or even increase services!

    Hey! We could borrow the money! Wouldn’t that be swell?

  5. John K. Avatar
    John K.

    Jim Bacon’s point deserves some real attention; and the follow-up posts also merit consideration. The real estate tax system is not serving citizens particularly well, especially the elderly and those on fixed incomes. Clearly, someone has to pay the bill for public services, but change is needed. My neighbor tells me that local revenues from residential real estate tax assessments here in Arlington rose by more than 46% over the past few years. I haven’t confirmed this point, but I expect that he is right. My own real estate assessment jumped 35% just this year. Of course, the rise in assessment can be mitigated, to some degree, by a change in the real estate tax rate. Unfortunately, the Arlington County Board is unwilling to undertake significant changes to such rates.

    Here’s a little perspective, too. The Bureau of Economic Analysis at the U.S. Department of Commerce reports that Virginia’s annual personal income increased 6.38% for the period 2001-03. (Go here and click “State Annual Personal Income” for source data.)

    In other words, local tax revenue jumped about six-fold compared to what average residents of Arlington County experienced in personal income growth for roughly the same period. What’s more, if federal and state pass through funds to Arlington County also rose 7.1% between 2001-05 (according to County figures), it should be an easy call for the Board to enact a SIZABLE real estate assessment tax rate reduction this year. I would hope that other local jurisdictions do likewise.

    Then, perhaps, our representatives can address the more fundamental troubles presented in taxing real estate as a source of revenue.

  6. Barnie Day Avatar
    Barnie Day

    The correspondents here make a couple of terrific points that need some emphasis. Top to bottom, our system of taxation no longer fits our economy. We are a service economy, yet we don’t tax services. Local governments don’t tax earnings, but fixed assets–land, houses,vehicles, etc.–a model that is at least 75 years out of date. When we talk about a ‘strong economy’ here in Virginia, we’re really talking about only one segment of our economy–corporate income. Two other brief points: (1) local governments in Virginia can increase revenue through ‘back door’ tax increases via reassessment to a maximum of 1 (ONE) percent. Anything above that requires a proactive public vote to raise the RATE; and (2)the ballot is still quite a powerful instrument of change.

Leave a Reply

ADVERTISEMENT