Why Property Taxes High In USA – The revenue generated from property taxes is a small amount for a country like the United States of America, but it is still for towns, cities, and counties. The property taxes taken by the civilians of a specific town is then used to give income to police, repairing of roads and parks, water and sewerage systems, security, municipalities, local schools, infrastructure, etc.
The local governments are responsible for taking these taxes. The taxes are not used by the government rather by local entities. These taxes are used within the country for a specific location for the betterment of people living there. These taxes are used for:
The United States of America is known worldwide for giving free education to the underprivileged. A portion of these local taxes goes into the findings of local schools in various school districts.
The property tax is the most significant source of revenue for primary and secondary schools. Almost 50% tax by local government is given to schools and out of this 50% around 75-80% is from property taxes. Only 10% is contributed by the federal government.
Property taxes for education are a great way to link the government with underprivileged people. They can seek education free of cost and can use resources. Due to this funding educational institutes work properly and know how to manage the finances. If the funding is better, then teachers also do their work properly.
However, some citizens think property taxes are unfair, and old citizens who are not employed have to give amounts that they can not afford. If these taxes are not paid and schools are not funded then it put the public employees of the school in a difficult position.
To lower the property taxes is that the federal government should finance the schools
If the schools are not funded then the local government can not ensure a good status of education. It becomes a problem for low-income students and who are underprivileged. The number of students graduating per year declines.
Similarly, if the federal government does not fund the schools, then the local government has to pay and property taxes rise making the budget of citizens out of control. One way to lower the property taxes is that the federal government should finance the schools.
One main problem with Property Taxes being used for education is that rich and schools located in well-off areas can generate their revenue without even receiving any funds. As a result, the schools located in rural areas do not have enough funds and this result in the rise of property tax.
Another reason for high taxes is because local governments have to pay salaries to municipal employees. These employees include police, firefighters, local safety officers, technicians, emergency facilities, medical services, and the pensions of Public Officers are also paid by the local government.
Municipalities take almost 24% of property taxes, and the other income is generated by their resources.
If you are paying property taxes then do not think that your money is being wasted. Because to ensure your safety local government has to employ security officers and work on proper security measures. The taxes depend on your location too. If you are living in an urban area, then you have to pay high property taxes because urban areas need more maintenance and security.
If a state has tourism, then it has a good amount of revenue. States like Hawaii have tourism, so they do not need property taxes to pay for schools or municipalities. The burden on the tourism industry increases and the property taxation decreases making a relief for the citizens.
The reason for high taxes is that some states do not have a competent level of tourism. So to fulfill the requirements of local entities, the local government takes high taxes on properties.
One of the reasons for high property taxes is for the maintenance of infrastructure in a locality. A good infrastructure attracts the people and makes an environment. But if a road is broken, then it needs repairing, and repair is done by authorities who get paid by the local government. Road construction takes requires a huge amount of money.
This money is taken from your property taxes. Infrastructure includes that parks, jogging areas, sports arenas, and other recreational facilities for the public. These areas need constant repair work and require maintenance.
In rural areas, funding is required for agriculture purposes. If such localities are exempted from taxes, the price of food goes up, and it is difficult for a common man to fulfill needs. So it is better to pay property taxes instead of paying for costly food.
In northern areas, for clearing a high amount of snow, machinery is required. Along with machines, manpower is needed to remove snow. So the local government takes this money from property taxes.
Big infrastructure projects are funded by the government; small projects like repairing in a locality are funded by local governments.
The reason for high taxes is greedy politicians. The division of property taxes in different areas depends on the approval of politicians. If they divide it unfairly, local people have to pay a lot of property taxes and get fewer benefits from those living in posh areas.
If they divide it unfairly, then property taxes go up. More corruption means that less annual revenue is generated, and for more money government takes a high amount of taxes.
A large amount of property taxes go for sewerage, trash collection, drainages, and storm and water management systems. As the population is increasing, more water is required. In urban areas, the water bills are included in the property tax bill. In some states, the water and sanitation bill is charged separately.
Local governments have to fund the authorities responsible for sanitation from the Property Taxes they collect. To ensure a clean and hygienic environment for people to live in local government collects high taxes from citizens.
Top 10 States that have lowest tax rates:
If you want to own several homes and pay less tax, then these are the top 10 states with property taxes lower than 1%.
Hawaii is considered the best place for property taxes in the United States of America. It has the lowest tax rate that is an average of 0.28%. Why they have the lowest tax rates because there are easily available exemptions for homeowners.
The home exemption is a discount which is given to property owner or old age people. You have to apply for it, and next time the exemptions are made automatically. It is one of the biggest reasons for tax rates being the lowest in Hawaii. The house median values are a bit high in Hawaii that is almost $648,194. So people who do not pay taxes on right might suffer from this.
0.29% and 0.28% are the averages for Honolulu county and Hawaii County. But Mali County has even lower tax rates that are 0.19% on average. It is the lowest of any county in the whole USA. As for Kauai County, the average tax rate is 0.25%.
Alabama after Hawaii has the lowest property taxes. It is because the homeowner and old age exemptions are available. Old age exemptions are for people who are above 65 and for people who are disabled or blind.
Secondly, the houses are affordable in Alabama as the house median value is less than that of Hawaii that is almost $150,000.
The part of these taxes goes for educational institutions especially local schools, and the other funds are used for infrastructure.
The property tax rates vary from county to county, and it also depends on the location you are living in a county. Majorly a school district is the factor of high tax rates.
For example, Jefferson County has the highest property taxes in Alabama compared to another county. The average tax in Jefferson is 0.66%. Some additional taxes are also applied depending on the location. Along with this some municipalities also collect their taxes especially in Birmingham city which makes a total of 0.75% average tax per year.
Similarly, Lee and Shelby’s county also share the highest property tax rates in Alabama. It is because they focus on the education and infrastructure of a county.
A county like Walker, Washington, and Fayette has the lowest property tax in Alabama as they do not take additional charges making an average of 0.29% property tax.
Louisiana is also a part of the states that have the lowest property tax. The effective property tax rate is 0.53 %. Homeowner exemptions are the main reason for such low rates. Exemptions are allowed to people above 65 and to that owner who have a primary residence. These exemptions save a good amount of dollars for homeowners, and almost $7500 of total assessed value is deducted.
These taxes are taken by the local government mainly for educational purposes. The locations in the south of Louisiana have low effective tax rates as compared to that of the north. The average tax rate varies from parish to parish (a parish as equivalent to a county).
St. Tammany Parish has the highest property tax, which is 0.81%. The local government gives a part of these taxes to schools making them the best educational institute.
Whereas the Calcasieu’s Parish has the lowest tax rates that are 0.43% making it affordable for people to live.
The median house value is around $171,504, and even the gas prices are lower in Louisiana, which makes the overall property tax lowest.
Wyoming is probably the best state to live in because it does not take state income tax as well as charges the lowest property taxes. They take up of an average 0.57% taxes. The reason is that they assess the property fairly and generate their revenue from minerals, mines, and quarries. They even allow you to pay taxes in installments. The taxes are used for educational purposes and infrastructure.
Fremont County with an effective rate of 0.68% has the highest property tax because it is located in mountains. The same goes for Washakie and Albany County. Whereas the lowest tax rate in Wyoming is of Titan County with an effective value of 0.48% and Sheridan County, Platte County has an average mileage rate of 0.57%.
5. South Carolina:
South Carolina is one of the States that have less than 1% property tax. The average rate is 0.57%, and this is because of lower assessed rates on home-owning residencies. People who have home-owned residency enjoy this benefit more as compared to people having a primary residence.
Richland County and Newberry County has the highest property tax rate. 0.79 % is the effective millage rate, and this is because of school district taxes and location. On the other hand, Horry County has the lowest rate that is 0.38%.
6. West Virginia:
West Virginia is on the 9th rank, having the lowest property tax rates. Its average is 0.57%. The taxes are calculated based on the assessed value of the property. You can pay the taxes in installments, two times a year. On each installment, you get a discount of 2.5%. That is why this state has the lowest taxes.
Marion County is in the north of West Virginia and has the highest tax rate in the state. The effective value is 0.69%. Similarly, Kanawha County is the largest county in the state and has an effective millage value of 0.69%.
Counties like Pocahontas (0.33%), Clay (0.37%), Summers County (0.39%) has lowest property tax rates in West Virginia.
This state has the lowest property tax is around 0.49% on average, making it include in the list of lowest property tax states. The main reason is that the revenue generated stays in the county and is not used for the whole state. The fair and specific use of taxes for the country saves the citizens from property taxes.
Pueblo County has the highest tax in this state. The millage rate is 0.69%. Whereas Jackson County (0.23%) and Chaffee county (0.32%) has the lowest property tax rates.
Utah has a property tax of 0.58%. It is low because they have exemptions of 45%, and even primary residents also enjoy these benefits. It has tourism due to salt lake, so that saves from extra taxes.
San Juan is the only County that has a 1:00% of effective rate. Similarly, Weber County has 0.75%. The Summit County has the lowest tax rate, almost 0.45 %, due to tourism, but the mean value of the house is high, so it costs the residents a little. The rich county has the lowest property tax, as well as house, mean value, upon $192,200 home mean value you only have to pay $815 annual tax.
Delaware state having three counties has a 0.56% effective rate. It means if the cost of your property is $200,000 then you only have to pay $1120 tax. The counties reassess their taxes based on last year’s taxes. In this way, the taxes are always lower than the current property value. It helps the citizens to pay fewer property taxes. However, the house median value is a bit high but the income of citizens is high and there is no sales tax.
Sussex County has the lowest property taxes that are of 0.34%, whereas Castle County has the highest rates that are of 0.74% annually.
Arkansas has an effective tax rate of 0.64%. The housing cost is low, as well as the gas tax is low. But the sales tax of the state is high. The highest tax rate is of Pulaski County because it is the most populous county, and the effective rate is 0.81%.
These property taxes depend on the school districts. For example, Benton county has the highest property taxes because of the school district. The effective rate in Benton county is 0.75% 2nd highest in the state. The lowest in this state is of Montgomery County around 0.45% property tax.
How can you lower down your taxes?
There are multiple ways of lowering down your taxes.
Property taxes vary from state to state and county to county. You can move to a less expensive area that has low property taxes. Some states don’t even charge state taxes and have property taxes lower than 1%. If you want to own a lot of property, then you can move to such states and remain in benefit.
A lot of states have homeowner or old age exemptions available. There are some tax relief policies for the disabled, underprivileged, old age, and agricultural purposes. Do check if you meet the eligibility criteria for it. These exemptions save you hundreds of dollars yearly.
Sometimes local governments have errors in the taxation process, and they can send you the wrong bills. So do check your tax cards that have all the details of your taxes. If you notice errors, then you can ask for a reevaluation. There are some storage sheds or greenhouses in your home. If you do not need them, and it is adding up extra charges in your tax, then get rid of such things immediately. But don’t forget to notify your assessor so that they don’t add it up in your taxes.