Although we’ve been learning that the government doesn’t need nearly as much money as it’s been spending for the past many years, money is necessary to running the country.
For that reason, we Americans pay taxes, and more taxes.
According to AI, the average household earns between $47,500 and $100,500 – and is subject to 22% income tax. Those who earn more pay up to 37%.
On top of that, we pay 7.65% for Medicare and Social Security – or 15.3% if we’re self-employed. And then there’s sales tax, which ranges from zero to about 13%. The average is about 7.7%.
All of this comes to more than 37% of the average person’s income.
We pay property tax on top of that, and some legislators are saying it has to stop.
In many states and communities, home values – and the accompanying taxes – have risen to such an extent that some seniors on fixed incomes have been forced to sell property they’ve owned outright for years. When your property tax suddenly rises to 10% of your income, what else could you do?
Renters don’t get out of paying property taxes – they’re simply added into the rent they pay each month.
Here in Texas, a group is pushing for the elimination of all but a consumption-based tax. They propose doing away with property taxes, plus a whole laundry list of other taxes. They’d simplify the whole system with a 7% consumption tax on the entire economy.
Now that the discussion has been started, others are likely to come up with their own plans for eliminating property tax, as have the following states:
In Illinois, which has the second-highest property taxes in the nation, Republican Senators Anderson and Syverson have introduced a bill to create a homestead exemption. This exemption would eliminate property tax on homeowners who have lived in the same house and paid taxes for 30 years or more.
That sounds good to those who have done so, but young people aren’t too enthused. It wouldn’t affect all that many people, because on average, the majority of people change houses about every 9 years.
Still, they say it would be a start – a foot in the door with some kind of agreement that could lead to offering that benefit to those who have resided in place for 10 or 20 years. Their point is to let Americans actually own their own property.
Kansas Representative Blake Carpenter(R) has an innovative proposal inspired by Norway’s sovereign wealth fund. This fund leverages accumulated revenues for public benefit. He wants to eliminate some sales tax emptions in order to generate about $2 billion per year. This money would go into a fund called the “Freedom From Taxes Fund,” where it would eventually generate enough interest to pay for schools in Kansas.
Representative Carpenter believes that within 8 years, the interest would replace roughly $900 million currently raised through property taxes. And then – perhaps as the fund grew, it could generate enough income to do away with state income tax in Kansas.
The push to eliminate property taxes in Florida is just getting started. Governor Ron DeSantis is giving public support to a bill introduced by Republican State Senator Jonathan Martin which would create a plan for doing so. The study will examine alternative revenue streams to replace current property taxes. Any such plan would need to be approved by 60% of the voters.
In Pennsylvania, Representative Russ Diamond has introduced a bill that he says will prevent homeowners from feeling that they are renting from the government. He has not yet come up with a plan to offset the lost revenue. However, State Senator Doug Mastriano suggests taxing international money transfers and imposing new taxes on endowments held by wealthy universities in Pennsylvania.
Montana is considering a proposal to reduce taxes on primary homeowners.
All of these proposals will face challenges, as statewide property tax initiatives may interfere with the way city and county taxes are levied. In addition, efforts to offset property taxes by more heavily taxing wealthy citizens is bound to be met with resistance from those individuals most likely to show up at the polls.
If you’re looking for a new home, we can’t help you avoid property taxes, but we can make sure you get the best possible interest rate and pay the lowest closing costs available in Texas.
Call us today at Homewood Mortgage, the Mike Clover Group.
Call 469-438-5587 – or visit us at mikeclover.com
NMLS#234770
