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Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
34,726 posts, read 58,079,686 times
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Quote:
Originally Posted by ohio_peasant
That stands to reason, but I'd surmise that the more "libertarian" states such as Texas would have smaller government staff and less generous remuneration for said staff. Why would they have comparatively higher taxes? Or is there some "stealth" tax ready to wallop the gullible and unsuspecting?
Texas has a lot of counties (254 of them). Some are very dinky ~100 population. That is a lot of services to duplicate. Judges are a dime a dozen, often many per county same with police depts. Many schools also have their own police dept. All that costs
Lots of tax money. Schools (isd) are brutal when paying property taxes in Texas, some ISDs have 2x the levy as entire county services. WA is about equal. Schools vs government. Of course many tax payers never have used or will realize any benefit from schools. You still have to teach your employees how to add and subtract, how to write, how to speak to customers. But as a taxpayer you're covering the daycare costs for dual earner families, so they can excel in their personal earnings. That's good, so they can gift more to the charitable school foundation, for the benefit of their own child's daycare.
No place is perfect, but it's good to know the warts and special interests. Income tax free states lose their luster when you get to your no-income years. But you will still be paying property tax in a high, or low property tax state. Tho many states have homestead and retiree reductions, WA is very limited. Every property sale pays a sales tax, so the state knows the sales price, and in turn adjusts the valuation. (Even if sales price is higher than valuation for a number of reasons. (Financing, personal property included, points paid.). Texas and Wyoming (both income tax free) are 'non-reporting' states, so the assessor has to dig a little deeper to discover the sales price. They usually subscribe to MLS, so they have a close idea, and many MLS sites track actual sales price per property as a metric.
Every property sale pays a sales tax, so the state knows the sales price, and in turn adjusts the valuation. (Even if sales price is higher than valuation for a number of reasons. (Financing, personal property included, points paid.). Texas and Wyoming (both income tax free) are 'non-reporting' states, so the assessor has to dig a little deeper to discover the sales price. They usually subscribe to MLS, so they have a close idea, and many MLS sites track actual sales price per property as a metric.
Non-disclosure RE sales states can cause greater errors in assessments which can cut both ways. Though MLS should help depending on its usage within a given region.
"The lack of property sales information in non-disclosure states can also lead to errors in property tax assessments. Local governments complain that the lack of disclosure causes considerable under- or over-appraisal of properties. Many reports show that the lower-priced homes pay a disproportionately larger tax burden than they should. Conversely, the higher priced homes frequently pay a lower-than-expected tax burden." -- Several states do not disclose sale prices to public
As a prior RE appraiser, current, accurate data is the basis for all valuations. It's also partly why appraisers must be state licensed to hold them legally responsible to uphold certain standards related to the ethical usage of that data. Remember the S&L crisis? With less data, unintentional errors are much more likely to occur. And that can go either way with the need to extrapolate the information. I used to work for bank as a review appraiser and it was shocking to see the kinds of things 'professionals' would attempt to pull off when monetarily incentivized to do so - hit certain numbers too high or too low. That can lead to corruption in the case of tax assessments where the county stands go gain by 'guesstimating' in their favor. That's not saying they won't still try that in disclosure states. But they will have a much weaker case to stand on without verifiable, relevant, comparable, recent evidence to back it up. And that can be more easily challenged by independent subject matter experts if called into court. So, I favor full disclosure of information for fairness and better accuracy vs. the greater frequency of assessment errors in both directions - too low or too high.
Derek
Last edited by MtnSurfer; 01-28-2023 at 03:19 PM..
The population mix matters too. If the jurisdiction has a lot more poor people and businesses relative to richer people and businesses,, then the richer people will not have to subsidize as much. WA’s residents and businesses are ranked relatively highly compared to Texas’ in terms of income and GDP per capita.
This is probably the principal cause. Public sector employees may be "expensive", but there just isn't that many of them. Poor people, or nominally poor people, are vast. I see this currently in Los Angeles, where there seems to be stark dichotomy between "rich" and "poor", with the former heavily subsidizing the latter. Or in other words, difference in income is much larger than difference in consumable resources. Without entering into a debate on the morality of this, I do very much concede, that a population that's broadly "less poor", whatever that means, ought to correlate to lower aggregate tax burden.
Quote:
Originally Posted by StealthRabbit
... Income tax free states lose their luster when you get to your no-income years. ...
This much depends on how one's lifelong income, savings and investments were structured. People with large 401K plans may find that their RMDs, if they manage to reach age 72, will substantially exceed their highest-ever W2 income. Passive investors who spent a lifetime in S&P 500 index funds may have nothing for tax-depreciation or 1031 exchange or any other way of reducing their taxes. Instead, the annual dividend distributions add up, so that again, by older-age, these can easily exceed what W2 income ever was.
If/when the paycheck stops, the paper earnings stream doesn't. And since states almost never offer lower tax rates for dividends or long term capital gains, a retiree may find, that her state income taxes are something like 2/3 of her federal income taxes!
This is probably the principal cause. Public sector employees may be "expensive", but there just isn't that many of them. Poor people, or nominally poor people, are vast. I see this currently in Los Angeles, where there seems to be stark dichotomy between "rich" and "poor", with the former heavily subsidizing the latter. Or in other words, difference in income is much larger than difference in consumable resources. Without entering into a debate on the morality of this, I do very much concede, that a population that's broadly "less poor", whatever that means, ought to correlate to lower aggregate tax burden.
This much depends on how one's lifelong income, savings and investments were structured. People with large 401K plans may find that their RMDs, if they manage to reach age 72, will substantially exceed their highest-ever W2 income. Passive investors who spent a lifetime in S&P 500 index funds may have nothing for tax-depreciation or 1031 exchange or any other way of reducing their taxes. Instead, the annual dividend distributions add up, so that again, by older-age, these can easily exceed what W2 income ever was.
If/when the paycheck stops, the paper earnings stream doesn't. And since states almost never offer lower tax rates for dividends or long term capital gains, a retiree may find, that her state income taxes are something like 2/3 of her federal income taxes!
Well, yes and in the case of public sector employees, CA and other states are infamous for giving out 6 figure pensions for life. I know quite a few of such individuals enjoying these spoils during 'early' retirement. One friend was an LA county beach lifeguard. But firefighters and many other others come away with a significant public funded pension. When a couple retire both with such pensions, their income can be quite high during their later years and so that must be considered. Although, if they own their own home in a state like CA and have prop 13 protection like many I know, they've got quite a nice retirement income for life without too bad a tax burden. True, the income tax is high but the total tax burden is lowered due to low property taxes - if they bought decades ago vs. more recently.
For anyone who retires with a higher income based upon all investments (401k, pensions, income properties, etc...), this must be factored in. By contrast, if the income is significantly lower, then a no income tax state may not help very much especially if they own land - gotta have my acreage. Then a state with a progressive tax structure like CA, HI and OR which favors low-income earners may be the better financial option.
Derek
Last edited by MtnSurfer; 01-28-2023 at 04:15 PM..
Zero chance it will sell for even 50% of assessment. It's beat, and I'm not fixing it. "Friends of the Gorge" have provided 30 yrs of misery to living in an otherwise pleasant (tho stormy) location. They can buy it from my designated charity, which is very likely. My charity will put the funds to good use, and the FoG have unlimited funds via sympathizers. I'll have my neighbors run the price up, so the FoG can send out more 'panic' email blasts to raise more money.
It will work out well for my charity, but it requires working to the bone and creative financing, and starving the family to hang on each yr, just for a dry place to sleep. Living under a Bridge is pretty crowded these days.
I would honestly like to better understand how the friends were not always so friendly in your situation. While out hiking in the Gorge, I do reap many of the benefits from the lands they've helped to acquire, maintain and make publicly accessible for all to enjoy. So, that is generally a good thing and the only real side I have seen or experienced. I'm also a big advocate of persevering and protecting our natural environment for all vs. a limited few. But in your case and possibly others, there have been downsides as well. I can't help but wonder what those are?
Texas has a lot of counties (254 of them). Some are very dinky ~100 population. That is a lot of services to duplicate. Judges are a dime a dozen, often many per county same with police depts. Many schools also have their own police dept. All that costs
Lots of tax money. Schools (isd) are brutal when paying property taxes in Texas, some ISDs have 2x the levy as entire county services. WA is about equal. Schools vs government. Of course many tax payers never have used or will realize any benefit from schools. You still have to teach your employees how to add and subtract, how to write, how to speak to customers. But as a taxpayer you're covering the daycare costs for dual earner families, so they can excel in their personal earnings. That's good, so they can gift more to the charitable school foundation, for the benefit of their own child's daycare.
No place is perfect, but it's good to know the warts and special interests. Income tax free states lose their luster when you get to your no-income years. But you will still be paying property tax in a high, or low property tax state. Tho many states have homestead and retiree reductions, WA is very limited. Every property sale pays a sales tax, so the state knows the sales price, and in turn adjusts the valuation. (Even if sales price is higher than valuation for a number of reasons. (Financing, personal property included, points paid.). Texas and Wyoming (both income tax free) are 'non-reporting' states, so the assessor has to dig a little deeper to discover the sales price. They usually subscribe to MLS, so they have a close idea, and many MLS sites track actual sales price per property as a metric.
Texas also has a ginormous highway network. Not just the major roads, but every county is criss-crossed by what they call "Farm-to-market" roads paid for by local tax dollars. I used to do a LOT or road biking in central Texas through all kinds of remote countryside and the quality of a lot of those rural roads that barely see a couple cars per day is amazing. Often they also have paved shoulders that are a car lane wide which means the cycling is about 1000% better than in most of the Pacific Northwest where rural roads are much narrower and much fewer and far between.
Here is a random rural "farm road" in the middle of nowhere about 20 miles outside Waco. Notice the paved car-width shoulders which are great for biking, and the width of the pubic right of way fence to fence. That is what your property taxes in rural Texas are paying for: https://goo.gl/maps/T5xtnzAw4jKZhpzu5 You ever see a rural farm road like that in Washington? This is what the typical rural county road looks like around here: https://goo.gl/maps/UsskUrMSbBUooue19
Texas also has a ginormous highway network. Not just the major roads, but every county is criss-crossed by what they call "Farm-to-market" roads paid for by local tax dollars. I used to do a LOT or road biking in central Texas through all kinds of remote countryside and the quality of a lot of those rural roads that barely see a couple cars per day is amazing. Often they also have paved shoulders that are a car lane wide which means the cycling is about 1000% better than in most of the Pacific Northwest where rural roads are much narrower and much fewer and far between.
Here is a random rural "farm road" in the middle of nowhere about 20 miles outside Waco. Notice the paved car-width shoulders which are great for biking, and the width of the pubic right of way fence to fence. That is what your property taxes in rural Texas are paying for: https://goo.gl/maps/T5xtnzAw4jKZhpzu5
Yes, that is exactly what I've observed since moving to WA after living in both CO and CA. The roads are generally so much more narrow here with far fewer cycling or pedestrian friendly options. Then, if you ever get a flat tire, god pity the fool trying to change a tire on these narrow roads with no shoulders and our many monster trucks tearing through. If cycling out there, I guess you must put some level of trust in the yahoos behind the wheel.
At least for me, some taxes are worth the cost if actually spent on such infrastructure improvements for all and spread out evenly. This would be one I would gladly pay for if they actually used the money for its intended purpose. There are many things the state wastes more money on without nearly as much benefit to the average citizen.
Derek
Last edited by MtnSurfer; 01-28-2023 at 06:12 PM..
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
34,726 posts, read 58,079,686 times
Reputation: 46195
Quote:
Originally Posted by ohio_peasant
...much depends on how one's lifelong income, savings and investments were structured. People with large 401K plans may find that their RMDs, ...
If/when the paycheck stops, the paper earnings stream doesn't. And since states almost never offer lower tax rates for dividends or long term capital gains, a retiree may find, that her state income taxes are something like 2/3 of her federal income taxes!
There are 12 non-tax states for retirement income, but many other states are very, very low on senior taxation. Taxable gains and depreciation recapture from LT positions will have to be dealt with. Of course each situation will determine your options. Several retired friends domicile in income tax free US protectorates (yet another option, as are foriegn countries, each having specific taxation rules to understand based on your income levels and sources.) https://www.aarp.org/money/taxes/inf...ributions.html
I have had 401k's since 1978, tIRA since 1974, so I could have had RMD forced withdrawals, but I never made much and 'retired' pre age 50, so have been doing Roth rolls during many yrs of no income. Plus I have always given away more than I spend on myself, so will use QCD's if any RMD's arise. $2m in taxable qualified accts only requires $60k RMD/ yr at age 72, so that's not very hard to give away. Too bad property taxes don't qualify for QCD! Of course there is the need to plan for the death of a spouse and then filing single could really muff up taxes and RMD and IRMAA, so best to plan that with a Life Ins coverage that will exceed qualified accts, and NOT be taxable, where a surviving beneficiary of 401k / tIRA might jump into a very high tax bracket and get nailed with IRMAA. Domicile in an income tax free state is not gonna bail you out of that one
There are 12 non-tax states for retirement income, but many other states are very, very low on senior taxation. Taxable gains and depreciation recapture from LT positions will have to be dealt with. Of course each situation will determine your options. Several retired friends domicile in income tax free US protectorates (yet another option, as are foriegn countries, each having specific taxation rules to understand based on your income levels and sources.) https://www.aarp.org/money/taxes/inf...ributions.html
I have had 401k's since 1978, tIRA since 1974, so I could have had RMD forced withdrawals, but I never made much and 'retired' pre age 50, so have been doing Roth rolls during many yrs of no income. Plus I have always given away more than I spend on myself, so will use QCD's if any RMD's arise. $2m in taxable qualified accts only requires $60k RMD/ yr at age 72, so that's not very hard to give away. Too bad property taxes don't qualify for QCD! Of course there is the need to plan for the death of a spouse and then filing single could really muff up taxes and RMD and IRMAA, so best to plan that with a Life Ins coverage that will exceed qualified accts, and NOT be taxable, where a surviving beneficiary of 401k / tIRA might jump into a very high tax bracket and get nailed with IRMAA. Domicile in an income tax free state is not gonna bail you out of that one
You were one clever person to have had 401k's since 1978. Because while the law creating the 401k was passed in 1978, it didn't take effect until 1980 and the IRS didn't issue the implementing regulations authorizing employee payroll deductions into 401k plans until 1981. So no one else had 401k plans until 1981.
Maybe if you didn't give away half your money you'd be able to pay your property taxes on your gorge property!
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
34,726 posts, read 58,079,686 times
Reputation: 46195
Quote:
Originally Posted by MtnSurfer
...
At least for me, some taxes are worth the cost if actually spent on such infrastructure improvements for all and spread out evenly. This would be one I would gladly pay for if they actually used the money for its intended purpose. ...
Yes, of course, taxes are essential. And we all have our desired use of them. I enjoyed the wide shoulders in Colorado for bike riding, and have lost many more friends in WA and OR to rural biking accidents.
For the seniors we assist, few unexpected increase in taxes are a huge burden. Most have been retired for 20+ yrs and often on SS ONLY as income, but frequently in the homes they build for retirement. (House rich, cash poor). Reverse mortgages are a very expensive product and most people are not keen on their house going to a 'for profit' bank. ALL of the seniors we assist came from single earner households, No one came through life hanging onto the coat-tails of their MD or attorney wife, or had inheritance. Just normal working folks, usually retired farmers where the kids are using the assets of a few generations of efforts.
In my case, my retirement planning included a 10% annual cost adjustment for fixed expenses. That was woefully inadequate for 300% increases in property taxes and in HC insurance costs. (A(?)CA removed ALL the affordable options for HC, until the subsidies materialized later).
Taxes are fine as needed, but when property taxes alone, amount to over 50% of your income, there is not much room for groceries.
Let's see, what have we recieved in services for that 300% increase in taxes...
1. poorer performing schools with declining enrollments (per capita of residents)
2. considerably less open hours at the library (For those of us who have no internet connectivity at our expensively taxed home.
3. reduced road maint and snow removal (in the county's name of saving fuel and less employees)
4. Surcharges for EMS (with (4) levy increases)
5. Nearest Fire station closed and moved over twice as far away (increasing insurance)
6. Considerably greater fees for building permits and applications. (Our CGNSA applications now cost over $30k (just to get to the permit stage). We paid $0.26 for postage to White Salmon, WA when the Feds ran the program BEFORE they assigned it to the counties))
7. Impact fees for building on bare land
8. Lots of additional fees for those public schooled students. (this stuff previoiusly was free)
9. Huge windfalls of School Charitable Foundations, who's gifting used to support the needy, but can't be used for 'tax provided' school costs. (so let's increase the need for more school taxes) typical pig trough
...
101. The county assessor now has a high rise office with lots of nice walnut paneling and furniture.
102, Significantly increased employment and payroll in tax assessor's office
103. Plenty of new schools to sit empty 50% of the yr (as if we really need them, double shifts could easily carry the classroom needs, and reduce student / teacher ratios. Schools have indoor lighting )
104. Nice shiny new school buses that are used <10% of the typical annual use of commercial vehicles (few other countries use school buses for k-12...)
Personal home needs...
Just a dry roof and a place to lay my head in a personal retreat where we designed, dug, laid every brick and pounded every nail. Planted every tree and bush. Too bad the 'I got mine' crowd can flit in like a bird stripping your blueberries and strawberries... "I got mine, I'm fat and sassy, see ya". No thanks, no rebuilding, no contribution to the cause or needy... just snatch and flee (when the benefit to YOU is gone).
What's that ringing in my ear.?...
"Oh, I no longer can benefit from OR, CA, CO, TX... I'll go benefit from WA for awhile, then flit away, maybe to ID, MT, WY." Sounds so familiar.
Last edited by StealthRabbit; 01-30-2023 at 06:09 AM..
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) typical pig trough
