Retirement thoughts Past Present Future

[Straightgrain3016]

Starting & erasing 3 new replies or comments on taxes; relative to retirement..

Commenting on taxes without using politics to exemplify the impact taxes have on retirement; is a "bridge too far" for this old praratrooper.

We need a mod-waiver to keep this thread helpful.

Taxes could easily be 1/3 of all retirement considerations or calculations; the enterprise form of government(s) imposes the taxes; government is "politics".

There has to be a way to have civil discourse without catering to the "thin-skinned" people who's Power Distance is so high, it shuts down civil discourse.

 

[Oaktree]

I despise property taxes. That said, what you are proposing, imho, is making government run like a business, albeit may a monopoly business. They provide a service and those who use it pay for its construction, overhead, maintenance and improvements. Unfortunately, some are still going to get a free ride. A consumption tax seems to be the best answer.

And I equally despise sales taxes (which is what I presume you mean by "consumption tax"). How is a sales tax more equitable? Sales taxes are sneaky...nickel here, dime there...you don't realize how much you're paying out vs. a property tax bill twice a year.
And even if this "consumption" tax is only applied to "luxury" items, that is very subjective, and the beginning of a slippery slope.

Now...it's the 1980's...I come home wife is holding a bill & crying. Her '55 now considered collectable, appraised $10,000.
I called Governor's office raising h(((.
Just because '55,6,7 Chevys are collectable she's punished paying over 5x taxes when car was brand new!
Virginia then passed no old car tax.
Exactly the same with property. Farmers inherit family farm when expensive sub divisions move next to it paying more tax than a farm isolated.
Subdivision, new expensive homes...tax accordingly, buyer is aware what they're buying...but don't punish the farmer. Long term property (just like car owners) should be grandfathered in.

I'm not following your analogy here. Why is the state assessing the value of your antique car?

As far as farmland vs subdivision...don't know what state you live in, but many have a special category for large parcels, agricultural or just preserving open space. In my state it's called "current use", and if you property qualifies your tax rate is a fixed per-acre rate set by the state. The only catch is that if you remove it from current use (for example to subdivide), you owe the difference in tax rate of what you paid vs fair market value for several years back.

As far as grandfathering tax rates for long-term property owners, how is this fair? You and your neighbor paying vastly different tax rates for similar properties just because he hasn't owned his as long as you? No, I don't like it when my property is re-assessed either but it does keep it so everyone's kicking in their share.

Indiana's property tax system is fairly easy to figure out.

Property owners are entitled to a cap on the amount of property taxes over
- 1 percent of the gross assessed value for homestead properties,
- 2 percent for other residential and agricultural land and
- 3 percent for other real and personal property.

About as clear as mud. What's the difference between the 3 property classifications? Not sure what a homestead property is vs "other" residential land.
In my state property tax rates are set by individual cities/towns. In general, a community with a large commercial base has lower rates than one that's primarily residential. Schools account for better than 70% of tax bills here.

 

[MossRoad]

...

About as clear as mud. What's the difference between the 3 property classifications? Not sure what a homestead property is vs "other" residential land.
In my state property tax rates are set by individual cities/towns. In general, a community with a large commercial base has lower rates than one that's primarily residential. Schools account for better than 70% of tax bills here.

Primary home is 1%
2nd, 3rd, 4th... homes and ag land is 2%
Other (mystery ) is 3%.

 

[MossRoad]

Primary home is 1%
2nd, 3rd, 4th... homes and ag land is 2%
Other (mystery ) is 3%.

The best example I can find it the one they gave in the link.

Joe has house, garage, outbuildings, 5 acres total.
3 acres are zoned ag.

House, garage, outbuildings and 1 acre of land are the homestead. 1%
3 acres of ag land is 2%
The remaining 1 acre is "other" and is at 3%.

 

[goeduck]

After they croak, does the unpaid tax get passed to the estate or family or how does that work?

Here is how it is in Washington State. Most of these situations are "deferrals" not "exemptions". No free lunch, the heirs have to pay "Big Brother" eventually.

 

[Fuddyduddy1952]

Oaktree...we're in Virginia which has state income tax (earned and/or investment), sales tax (varies from 5.3% to 7% by county, 6.3% restaurant tax added, groceries however 1%), real estate tax and personal property tax.
"I'm not following your analogy here. Why is the state assessing the value of your antique car?"
So...prior to Virginia no car tax (maybe my rant to Governor had some effect?) cars were taxed by value. So (example) in 2018 we bought two new cars, $25K each...we paid $103.75 (4.15%) tax. In 2019 per Kelly Blue book they were valued at, say, $22K...so real estate tax was $517.00 ($2.35 per $100...varies by county). Then 2020 $19K...etc. To add confusion then those same cars we paid $25K for in 2022 valued at $28K since used car price increase!
(Later county board of supervisors reduced tax rate to $1.80/$100...another story).
Now! No car tax was passed applicable to antique collector cars. Prior to that ALL CARS were taxed. So...which is worth more, a 1963 Chevrolet Corvette or a 1963 Chevrolet Corvair? New, the 'Vette was $5,500...Corvair $2,500. Virginia would value the Corvair today at $5,000 but $150,000 for 'Vette. (Prices not exact...just a comparison).
Finally my point was to the Governor...you have two cars...same year...same price when new. One car now for whatever reason may be worth double, 10x value of another even if other is better made!
The exact same home could be worth $10K in Detroit...move it to Manhattan or Palos Verdes and it's worth $3M.

 

[WinterDeere]

As a childless retired couple we have spent 40 years paying school taxes as part of our property taxes. It's one of the services we don't use directly but benefit from hopefully a better educated citizenry that will become productive members of society. It's for the greater good. Thankfully we haven't needed the sheriff or volunteer fire dept either but I'm happy to support them.

^ This. I would not want to live in any region where the majority of the population isn't educated with at least a high-school diploma. Such regions and neighborhoods generally represent very high-crime areas. I'm not pretending correlation is causation, but correlation is there, nonetheless.

Primary home is 1%
2nd, 3rd, 4th... homes and ag land is 2%
Other (mystery ) is 3%.

Not sure what "personal property" entails, but the "other real property" would be rental or other income-generating non-farm properties which are not your primary residence, in most states.

 

[two_bit_score]

However, it is important to understand that local government budgets still determine property tax rates in your area. The caps ensure that a property owner does not pay more than a fixed percent of the property's gross assessed value in taxes but the caps do not change the local tax rate.

It’s the spending that drives up taxes. Always has been. Always will be.

 

[ovrszd]

Might take you up on that challenge another time.

No you won't. You've set the stage. No going back now.

 

[ovrszd]

Starting & erasing 3 new replies or comments on taxes; relative to retirement..

Commenting on taxes without using politics to exemplify the impact taxes have on retirement; is a "bridge too far" for this old praratrooper.

We need a mod-waiver to keep this thread helpful.

Taxes could easily be 1/3 of all retirement considerations or calculations; the enterprise form of government(s) imposes the taxes; government is "politics".

There has to be a way to have civil discourse without catering to the "thin-skinned" people who's Power Distance is so high, it shuts down civil discourse.

Good luck with that.