Reply to the Reply on Property Taxes

Adam posted a thoughtful reply to my post on property taxes. It was so good that I was initially inclined to be convinced by it. On reflection, however, Adam's response may simply reinforce my original conclusions:

Adam's Point: The senior property tax credit takes care of those on fixed incomes.

Except that not everyone on a fixed income is a senior (though my post did mention retirees). Moreover, since the credit existed before the increase, seniors on fixed incomes would still see a sizable increase in property taxes.

Adam's Point: The governor's tax package was regressive according the Maryland Budget and Policy Institute

Except that this analysis only takes into account taxation, not spending. Is the tax package really still even mildly regressive once one takes into account the variety of spending programs targeting poor and middle-income Marylanders? I doubt it. Additionally, property taxes tax property not income so the relationship of the tax to income--the very measure of progressivity--is less straightforward than with the income tax.

Adam's Point: Maryland cannot compete with Virginia on taxes so we need to compete on services. In any case, the County Exec's package raised the median assessed household by 38 cents per day and this rich county can afford it.

Let's leave the "cents per day" appeals to "Save the Children". Until recently, Maryland may have had somewhat higher taxes than Virginia but we were competitive--that is, we were in the ballpark. The state tax increases made us less so. If the millionaires tax had been adopted, we would have increased total state taxes paid by this group by roughly one-third over the past year, making us completely uncompetitive in the eyes of many.

Montgomery County is already the most expensive place in the nation (again, not in MD, not in the DC metro area, but the US of A) to buy and sell property in terms of transfer taxes. One question I'd like to have answered is how much property taxes have already risen due to incredible increases in assessed values that were not compensated for by decreases in the property tax rates. Bear in mind that many people have seen 10% increases in their property taxes for years thanks to these increases in assessed values. And the increased value is nice but one still has to buy someplace else to live after one sells.

And as much as it pains me to admit, there are probably worse places to live than Fairfax. They even have some good public schools across the Potomac. So I wouldn't be quick to assume that we win the services battle quite so handily as we might like to believe as much as prefer Maryland's overall approach.

Still, as Adam says, we may need to pony up to maintain the level of services we like here. As I said before, I think we're going to get the tax increases and the spending cuts in the near future as the Bush recession continues.