Wednesday, May 26, 2010

The Tax Caps Cometh

Today, the Wall Street Journal published an online article exploring the different ways China and the US are using property taxes to stimulate the economy. China may be considering a property tax to “dampen” their possible housing bubble. Whether this will keep China from experiencing a housing crash is up for debate, but it certainly didn’t keep the US housing market from plummeting.

On the other hand, people in Indiana, New Jersey and New York may see reduced property taxes to help stimulate their local economies. Here are the facts as stated in the article:
In Indiana, Republican Governor Mitch Daniels has already lowered property taxes on homes to 1% of assessed value. In New Jersey, Republican, Governor Chris Christie has introduced a reform package that would cap property tax increases to 2.5% each year. And in New York, Democrat Andrew Cuomo has just announced his candidacy for governor with a call for a 2% cap on property tax increases.

So, will property tax caps help homeowners? Are the caps good? Bad? This article explains that it depends on how you think of government. If you see shortfalls in city and state budgets as a revenue problem, you probably think property tax caps are a bad idea. Alternatively, if you think of budget shortfalls as mostly a spending problem, you will see a property tax cap as a tool to control that spending.

Read the full article here.

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