Property taxes enhance private value

I start fretting in August about paying the second half of my property taxes in October. I worry that I will forget to pay (as I have done), and get penalized (as I have been). So I decided to pay early and not worry about it. And, as you know, it can be a big chunk of money.

That’s probably why people have a knee-jerk reaction to property taxes. They see it all at once. My son and I were talking about this. He is comfortable with sales taxes and income taxes. These taxes are on transactions, in some ways discretionary, although a lot of purchases are not actually discretionary … think of underwear, for example!

We each benefit when we receive income from work, or from not doing anything (that would be income from stocks, bonds, capital gains, estates, etc.) A tax on these transactions of earnings and unearned income makes a lot of sense.

But my son wondered about property taxes. First I reacted as readers would expect me to, saying that taxes enabled the maintenance of a democratic civil society and a quality of life that we all enjoy to one degree or another. I didn’t dissect the type of tax or its jaggedness with intuitive expectations. But then I actually thought about property taxes and realized that property taxes don’t just slice away value from property we already own. These taxes actually add value to our property, making this property easy to sell for higher prices in the future, and building the tangible benefits embedded in that property.

Think about the public goods and services that are financed by property taxes. Schools, city and county expenses, including police and fire departments, emergency medical services, road construction and maintenance, transportation, airports, such as Paine Field, parks, hospital districts, ports, and, of course, the compensation of the public servants we depend on, such as firefighters, road workers, teachers, and even the ferry pilot to Jetty Island.

All these “things,” and the workers who make these things possible, increase the value of our property. Our property taxes are reinvestments in our property. Look at any flyer for a house for sale in your neighborhood. It will feature nearby parks, access to public transportation and freeways, and the local schools. Those fundamental elements of the public enterprise we call democracy also enhance the private value of your home and property. And they just make life a lot better.

You know that if your spouse has a heart attack, EMS will be there immediately … and they don’t ask for a credit card. You know that your kids have a place at a public school nearby. You know that the police are there to keep you safe.

Almost half of these assessments have been put in place through a direct vote of the citizens. Just in 2013, voters in Snohomish County approved three EMS levies, a levy for schools and technology in the Stanwood-Camano School District, and one for Valley General Hospital in Monroe (Public Hospital District No. 1.)

Property taxes in Snohomish County total $979 million in 2014. That’s about $111 per resident per month. Before you complain about this, consider how much you pay for your cell phone bill, or your Internet and cable TV. Then consider what you get from your property taxes: fire protection, schools, libraries, roads, 911, police and more.

Our homeowner’s insurance costs about a quarter of our insurance for three vehicles. Now, granted our house doesn’t move around at 60 mph. But it is more than 10 times the value of our cars. So why the cheap insurance? Because the fire station is nearby, and on call 24/7. The city’s water and hydrant system is inspected and maintained, with water instantly available. The city’s building codes, enforced by city workers, reduce the likelihood of fire damage in the first place. Property taxes reduce our private insurance bills.

School starts up after Labor Day. Already teachers, principals and coaches are on the job, getting our kids ready for school and our schools ready for kids. Much of that is financed by your property taxes. It works both ways: It is also an investment that builds the value of your property. And it financed a great education for my son!

Originally published at EOI Online