Would You Pay Double the Sales Tax to Pay Zero Property Tax?

[Ben]

Interesting long term (and long shot) proposal being introduced here in Idaho: Eliminating all property tax but almost doubling our sales tax (which would go from 6% to 11%).

Selfishly, I'd be all for it since I do 70% of my shopping in sales tax free Oregon. 

Though without more than cursory research into it, I kinda like the idea. Not specifically from being a property owner, but from the aspect that if we are going to be taxed for the services and other items paid by property taxes, let people besides property owners help pull the cart.

I was paying nearly 9% state and local sales tax before I left CA, so it wouldn't be a big jump for me to get used to, especially with removing the burden of property taxes, which have been rapidly rising here with the influx of people and rise in property values.

https://www.ktvb.com/article/news/local/capitol-watch/idaho-lawmaker-introduces-bill-to-repeal-property-tax-statewide/277-fb00422e-d68d-4aa3-b92e-db9ff0493d8f

[Fly320s]

Yes, I would in NH. 

We don't really have a sales tax, but our property tax is high.   

[MechAg94]

Being able to get away from the idea of renting my property from the state would be nice.  The problem is that fraud and black market products would increase the higher the sales tax goes.  

I have heard a point that property tax provides a small incentive to make your land productive.  It costs money to acquire a bunch of property and just sit on it.  Do you think there is an economic incentive keeping some minimal property tax?  

Maybe I would take a sales tax hit to put hard caps on property tax.  What burns people here is the property values keep skyrocketing. 

[charby]

Nope, I pay $2k in property taxes a year. Double sales tax would blow that amount away.

[MillCreek]

I pay a bit over 10% in local and state sales taxes plus $ 5600/year in property taxes.

[tokugawa]

One has some control over what they choose to buy. There is no control over a tax on the property.
Many if not most of the taxes we pay would and did have the founders somewhat...upset.

 The income tax being a particularly pernicious one- the idea that the fruit from sweat and toil of a mans labor would have to be paid to the king? It would have been inconceivable that Americans would pay such a tax. Nothing more than slavery.

[Angel Eyes]

In California, probably not.  Property tax is about the only tax that isn't blood-from-a-turnip excessive.

[Ben]

In California, probably not.  Property tax is about the only tax that isn't blood-from-a-turnip excessive.

Though that's certainly dependent on how long you've been in your home. Much as I hate CA these days, I did like that I was paying the 1% value (plus whatever that annual fractional increase was) of what I bought my properties for instead of 1% of their current values at any time. For the condo I lived in, I was paying $1400/yr the year I sold it. The new owner got hit with ~$5K.

I'm ashamed to say I actually don't know my tax rate here in ID, but for just the house and couple of residential acres associated with it (my ag land taxes are like $250/yr for the other 40-some acres), I'm paying something like 1.1% of the house's appraised value. We currently get a $100K "homestead" or whatever discount for our homeowner occupied properties.

[230RN]

Assuming sales tax on everything, not just the sale of property.

No.  Renter here.

Owner (corporation) would want to see a hike in sales tax so  wouldn't have to pay property tax, and I'm sure the reduction in property tax would not be reflected in reduction of rents or future increases.  Unless unicorns become routinely available at retail stores.

I'm sure States would be happy to be relieved of the accounting burden of collecting property taxes... sales taxes are pretty much "automatic" in the accounting burden.

Just my two bucks.  (Inflation, you know.)

Terry

[HankB]

Go for this, and you'll get half of what you ask for - your sales tax will double, but your property tax will remain. (Or if it IS eliminated, it will come back sooner rather than later in response to the inevitable shrieks of busybody socialists blubbering about "fairness.")

That's how government works.  

[K Frame]

Interesting theory.

I'd bet for a lot of people it would reduce their overall tax burden.

But, for others, I'm sure it would increase their overall tax burden.

I'm thinking it would be a pretty clear breakdown between rural and city areas.

My property taxes on a rather humble 1977 crapshack townhouse are nearly $5,000 a year. I sincerely doubt that I'd come close to buying that much stuff to make up for that, so I'd likely be all for it.

But, if I lived in a rural area with low property values, what I spend in sales tax under such a plan would likely increase my tax bill.



"Go for this, and you'll get half of what you ask for - your sales tax will double, but your property tax will remain. (Or if it IS eliminated, it will come back sooner rather than later in response to the inevitable shrieks of busybody socialists blubbering about "fairness.")"

About 15 years ago Northern Virginia was under some such kick to increase the local sales tax with that money going toward our road infrastructure. Sounded like a good idea, right? I knew a lot of people who were all for it.

Until I pointed out that there was absolutely NO guarantee that legislators in the rest of the state wouldn't look at that as a winfall... for them.

So, Northern Virginia has voted to increase their taxes and have raised $1 million dollars! I propose we cut Northern Virginia's general fund allocation by $1 million!

When I and others pointed that out to people (including at a community meeting), you could see the light come on in more than a few eyes.

One person, an idiot, I'm pretty sure, said "They wouldn't do that..."

Someone else chimed in with "They're politicians, they're not human, you're GD right they'll do that."

The measure eventually failed, and not long after a politician from another part of the state decried the fact that we hadn't raised taxes on ourselves, because "the rest of the state could have used the money that we would have freed up (from the general fund allocation)..."

[brimic]

Yes in a heartbeat.
Pay a 11% sales tax on a new property and never have to pay property tax on it? You'd be ahead of the game in 5-7 years in WI.
I don't buy a lot of 'new' things- I buy a lot of things I 'need' off CL and FB marketplace, so I'd come out way ahead.

[HankB]

. . . The measure eventually failed, and not long after a politician from another part of the state decried the fact that we hadn't raised taxes on ourselves, because "the rest of the state could have used the money that we would have freed up (from the general fund allocation)..."

Wow - does this ever sound familiar. Something very similar happened in a large multinational company I worked for, which had an associated employee's club with many activities from archery through golf and trap&skeet.

T&S was well-run and fiscally sound, and we'd saved a good chunk of money for range improvements. It leaked that the golfers got wind of this, and through some contorted reading of the organization's bylaws the golfers were going to assert that our "accumulation of wealth" was unwarranted and needed to be distributed to other, more needy clubs. (e.g., improvements to the golf course.)

So the T&S club accelerated the planned improvements and upgraded the clubhouse, bought some new traps, etc. ahead of schedule. When the golfers at a board meeting brought up the T&S club's presumed "wealth" and suggested it be redistributed . . . well, they were really, really REALLY pissed that the money they wanted to grab wasn't there any more, and that, somehow, we OWED it to them.   

[AZRedhawk44]

Any changes in tax structure need to accompany tax accountability, IMO.

Taxes on vehicles, tires, fuel and such pay for roads and state police an DMV/DOT stuff.

Taxes on utilities pay for municipal components of utility work.

Taxes on groceries or other lowest tier necessary consumption activities pay for "charitable" activities of government (welfare, homeless assistance, etc).  Though it's philosophically impossible for "charity" to happen with money taken by threat of violence from other people.

I'm really sick and tired of all taxes going into general funds, then different units of government chomping at it without accountability for the value of service rendered.

[K Frame]

'Selfishly, I'd be all for it since I do 70% of my shopping in sales tax free Oregon.'

Until the state got wind of people doing that and started setting up random checkpoints to check for "untaxed contraband" being imported into the state.

Not too many years ago New York rolled out a bunch of new, and pretty steep, itemized sales tax increases. When they realized that people were going across the borders into other states, the started doing rolling enforcements. IIRC, clothing was one of the items hit because it went from a very low, or no, sales tax to a pretty steep sales tax (but has since been ratcheted down, I believe).

That caused a lot of consternation in Pennsylvania because of the very long shared border. There were even accusations that NY was sending undercover on-duty agents into Pennsylvania to scan license plates at the big shopping areas so they could hit cars for searches as they came back across the border.

As far as I know, NY continues to do that outside of the Indian reservations, especially for cigarettes, because they're not taxed on the reservations. Excise taxes on a pack of cigarettes in NY state are around $5, and even more in New York City. I've heard that a pack of smokes in the city is now around $14.

And the state wonders why upwards half of the cigarettes sold in the state are bootlegged in.

[MillCreek]

For a whole lot of years, Washington operated a call-in number so you could report your neighbor that purchased or licensed their expensive cars, trailers, boats or RVs in Oregon, to avoid the Washington sales tax and license tabs fees.

[K Frame]

Virginia's had that, as well, because we personal property (the hated car tax) tax and DC and Maryland don't.

Friend told me how they used to rat out coworkers they didn't like.

[Ben]

For a whole lot of years, Washington operated a call-in number so you could report your neighbor that purchased or licensed their expensive cars, trailers, boats or RVs in Oregon, to avoid the Washington sales tax and license tabs fees.

I've not seen anything about Idaho state wanting to curtail Oregon purchases, at least for everyday items. I really don't think they care since it's a rather small population, small geographic area of the state where it's practical to drive to OR for everyday shopping. The only place it's really practical, that has enough services, is Ontario, OR. So that's a very limited part of ID. At some point you're wasting a lot more gas than the sales tax saved.

It appears they already have something in place for big ticket stuff. I bought my UTV in OR, and they were ready to charge me the ID state tax on it and do the Idaho registration. It was a farm vehicle though, so they also had the Idaho ST101 form to exempt me from Idaho sales tax. Seems both states are talking to each other and have some kind of amicable agreement.

[Fly320s]

'Selfishly, I'd be all for it since I do 70% of my shopping in sales tax free Oregon.'

Until the state got wind of people doing that and started setting up random checkpoints to check for "untaxed contraband" being imported into the state.

Not too many years ago New York rolled out a bunch of new, and pretty steep, itemized sales tax increases. When they realized that people were going across the borders into other states, the started doing rolling enforcements. IIRC, clothing was one of the items hit because it went from a very low, or no, sales tax to a pretty steep sales tax (but has since been ratcheted down, I believe).

That caused a lot of consternation in Pennsylvania because of the very long shared border. There were even accusations that NY was sending undercover on-duty agents into Pennsylvania to scan license plates at the big shopping areas so they could hit cars for searches as they came back across the border.

As far as I know, NY continues to do that outside of the Indian reservations, especially for cigarettes, because they're not taxed on the reservations. Excise taxes on a pack of cigarettes in NY state are around $5, and even more in New York City. I've heard that a pack of smokes in the city is now around $14.

And the state wonders why upwards half of the cigarettes sold in the state are bootlegged in.

I understand why NY did that: money.  But what was the legal justification?  Was/is there a law that says people have to pay NY sales tax on every item purchased out of state?

[K Frame]

"I understand why NY did that: money.  But what was the legal justification?  Was/is there a law that says people have to pay NY sales tax on every item purchased out of state?"

You already stated the legal justification... Money. How DARE people avoid paying the vig needed to support NY's glorious oppression...

Virginia (and I think MANY states) has a similar laws -- if you buy something out of state for use IN Virginia and didn't pay that state's sales tax, you need to pay Virginia sales tax. Now that law primarily addressed mail order, and later internet, sales, but New York took it a lot farther. In Virginia it's called the Consumer's Use tax. There's even a box on the state tax return for you to enter how much sales tax you owe.

Of course, me being the honest, upstanding citizen that I am, NEVER purchase anything out of state without paying sales tax on it...

[Boomhauer]

SC state sales tax is 6% then county and city usually tacks on 1-3% more to line the local politician’s pockets. And some tack on extra accommodations or hospitality taxes on top of that.

So we normally end up paying same or more sales tax rate as states without income taxes, which we still pay along with property taxes (including cars)

[Ben]

Considering this further, I'm wondering if it would end up being a more stable tax than property taxes? Again, geographic considerations have to be taken, but for states whose property taxes annually fluctuate with property values, sales tax could be more stable.

I haven't looked into the details, but people here talk about the big ID (and national) real estate crash of something like ten years ago, when prices in ID took a 20% hit, one of the biggest in the nation. That would be a significant hit to the tax man. Of course that would be mitigated in states like CA, with their tax model, but for the "fluctuating states", sales tax would be more like a stock index fund vs property taxes being like owning an individual stock.

[charby]

Considering this further, I'm wondering if it would end up being a more stable tax than property taxes? Again, geographic considerations have to be taken, but for states whose property taxes annually fluctuate with property values, sales tax could be more stable.

I haven't looked into the details, but people here talk about the big ID (and national) real estate crash of something like ten years ago, when prices in ID took a 20% hit, one of the biggest in the nation. That would be a significant hit to the tax man. Of course that would be mitigated in states like CA, with their tax model, but for the "fluctuating states", sales tax would be more like a stock index fund vs property taxes being like owning an individual stock.

Where I live the assessed value is about %70 of what the property would sell for.

[brimic]

Where I live the assessed value is about %70 of what the property would sell for.

Here, its about 1.4 to 3+% depending on where you live. I'm on the very low end because I live in a township.

[sumpnz]

Considering this further, I'm wondering if it would end up being a more stable tax than property taxes? Again, geographic considerations have to be taken, but for states whose property taxes annually fluctuate with property values, sales tax could be more stable.

I haven't looked into the details, but people here talk about the big ID (and national) real estate crash of something like ten years ago, when prices in ID took a 20% hit, one of the biggest in the nation. That would be a significant hit to the tax man. Of course that would be mitigated in states like CA, with their tax model, but for the "fluctuating states", sales tax would be more like a stock index fund vs property taxes being like owning an individual stock.

In WA, theoretically your property tax rates fluxuates so if the values drop the rate goes up and as values climb rates go down, keeping overall tax bills steady.  In reality they just go up relentlessly.

Sales tax revenue is quite volitile due to economic cycles.  WA was whining during the 2008-10 crisis because consumer spending, especially on cars, tanked and sales tax revenue with it.