Letters to the Editor

Harsh tax plan

January 28, 2012

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To the editor:

Last weekend, I heard our legislators talk about the governor’s plans for tax policy and school finance. If you own property or pay property tax as part of your rent, and you do, this is big news. Kansas already has the ninth-highest property tax in the nation. Under Gov. Brownback’s plan, the only way to counter years of cuts in state aid for schools will be to increase local property tax.

As for income tax, if you earn less than $25,000 a year, your tax liability will increase by over 5,000 percent! That should leave over half a million households hopping mad! In addition, he wants to make permanent the temporary sales tax increase, which affects the poor disproportionately.

People earning over $250,000 a year need not be concerned; they will do just fine with a $5,300 tax decrease. Small-business owners also will benefit, and that is a good idea. However, “small businesses,” due to kinks in the law, include such mom-and-pop operations as Koch Industries, a major supporter of Brownback.

Sens. Francisco and Holland and Reps. Davis and Ballard will be working to soften this harsh plan for shifting even more of the financial burden from the wealthy to the less well-off. Even conservative Republicans in the Legislature are expressing concern. We need to let them know we care.

Comments

Brock Masters 3 years, 5 months ago

I wouldn't worry too much about Brownback's tax plan. Seems everyone except Brownback and his staff realize it is a bad plan.

Abdu Omar 3 years, 5 months ago

What that means Fred, is that it will go through. People need to speak out and protest this foolish idea. Certainly Brownback is running the state as though he doesn't need to be reelected. He won't be in my book, but how do we stop this tax plan? We DO need to stop it.

I am retired, live off of Soc Sec and a low paying job, how can I afford more taxes?

Brock Masters 3 years, 5 months ago

i don't disagree that people need to speak out, but he has alienated everyone on this issue so it is pretty much DOA. But, again, you're right. We still need to speak out and watch it otherwise it might be ressurected.

jafs 3 years, 5 months ago

Have you seen the interesting chart that shows the vast majority of states that receive more from the federal government than they give are Republican states?

Richard Heckler 3 years, 5 months ago

Gov Sam Brownback does care if anyone agrees with him. He will sign off with an executive order. That's it.

Gov Sam Brownback cannot be trusted. He is a devious character.

imastinker 3 years, 5 months ago

Property tax is not paid by the renter, at least not directly.

Rents are always at Market rates, it's influences outside the landlord's costs that drive the rent that one charges. It's usually a good thing for the landlord, because inflation dilutes the value of the mortgage payment the landlord makes, while inflating the rent of the unit. Sometimes this is the only way landlords make any significant money, especially in a place like lawrence. It is likely that a change in taxes will change market rent higher, but it's not necessarrily so, because some ffolks may move to Perry, Eudora, Baldwin, Tonganoxie, etc as a result of higher rents, weakening demand in Lawrence and then lowering market rents. So, most tax increases don't typically have a 1:1 correlation between tax increases and rent increases. Thus, property taxes are a cost of doing business and not paid by the tenant. Higher property taxes, especially in a localized area, tend to hurt profitability and resale value of a rental property.

Rant OFF.

I lost all respect for Brownback when he said that the results of the KBA audit were "deeply troubling." He's dead to me.

just_another_bozo_on_this_bus 3 years, 5 months ago

All rental property owners are subject to property taxes, which means they are very much part of the market forces that determine rental rates.

Your rant makes no sense.

imastinker 3 years, 5 months ago

I'm saying that higher property taxes do influence market rents, but the two don't have a direct correlation. The landlord ends up paying part of the taxes from profits because rents in a place like lawrence are already higher than area towns and the landlord can't change the market rent. If he tries to pass all the costs on to the tenant they can move and he'll have vacancy problems. This affects the cash flow of the rental and the property value when the owner sells.

I didn't expect you to understand. You've never seen a tax increase you don't like.

Brock Masters 3 years, 5 months ago

Makes sense to me. Plus, saying that renters pay property tax on the property they rent is like saying I pay corporation taxes, regulatory fees, EPA fines, etc. because I buy products produced by corporations in factories.

imastinker 3 years, 5 months ago

This is true. What's more is that the price a company can charge for a good is strongly affected by competitive companies, ome of which are not located in the US or other higher tax countries.

Brock Masters 3 years, 5 months ago

What's your point Jesse? Did I write anything about not including all expenses and taxes into the cost of renting a property? Nope, never did so I don't get your point. And imastinker wrote that property taxes do influence market rents which I agreed with so again did you have a point other than to write something condescending?

Brock Masters 3 years, 5 months ago

Are taxes a factor in determining the rent charged for a property by a landlord? Absolutely.

Does a renter pay the property tax for the property they rent? No they don't.

Are corporate taxes figured into the cost of goods? Of course. Do I pay corporate taxes. Nope.

If that doesn't convince you, then perhaps this will. If you still disagree then let's make a bet. You and I will go to any apartment complex you want and I'll give you 100 dollars for any renter that can show us the tax bill they paid for the property they rent and you pay me a 100 dollars for each one that can't.

Katara 3 years, 5 months ago

Are you aware that one can claim the Homestead credit if one rents? If a renter is not paying property tax in some form, how is it that one can get a refund on it?

Brock Masters 3 years, 5 months ago

Look, it is really simple. Property tax is property tax. Renters simply do not pay the property tax on the property they rent.

Yes it is factored into the rent so in a sense one might argue they are indirectly paying it, but it is a false statement to say they are paying the property tax on their rental (unless as a condition of the lease they pay it).

You need to look up the homestead credit. For property owners it is based on the property tax paid. For renters it is based on the rent paid.

If renters paid property tax wouldn't it be based on the property tax paid and not the rent?

Linda Endicott 3 years, 5 months ago

You're simply arguing semantics...cut it out...

When the property taxes on the house where I live went up (I rent an apartment there), my rent immediately raised...and the landlord point blank told me that the reason was the raise in taxes...

No, technically the taxes are in the landlord's name and I don't directly pay property taxes...but since it is a factor in deciding how much my rent will be, I do indirectly pay taxes...and hey, the landlord is paying them with money that used to be mine...

Do you want to argue some more, or do you want to play nice now?

Brock Masters 3 years, 5 months ago

No it is not semantics. Semantics is the study of meanings. To say that a renter pays the property tax for the space they lease is incorrect.

Would it be correct if I told people that I've paid corporate taxes and capital gains taxes when all I've done is purchase products from companies that paid these taxes?

Why do you and others insist on trying to convince people that renters pay property tax?

And why is having a different opinion not playing nice?

Linda Endicott 3 years, 5 months ago

All right...I do not directly pay property taxes on the place I rent...but I do contribute to the fund...

Is that better?

And you're not playing nice because you're beating a dead horse...everyone gets your point...they just don't care anymore because you're starting to be a jerk about it...

Brock Masters 3 years, 5 months ago

But aren't you beating that same dead horse now? And, I've called no one names as you are doing.

And really, why is it a jerk to respond to those that respond to me? Why do you get to decide when to stop discussing an issue?

Did it really make you feel good about yourself to call me a jerk?

imastinker 3 years, 5 months ago

The lender writes the check. The money in escrow is your money. You pay property taxes on your house.

If a tenant doesn't like the rent they just move. The landlord can't raise the rent above market prices because it will sit vacant. Thus, increases in expenses are not necessariy passed on to the tenant.

Here in lawrence, we have a lot of new apartment buildings. Taxes are lower on these per unit than a house. If taxes go up, these will be less affected and could have a moderate increase in rents that makes the apartment buildings more profitable while the houses are less profitable.

That's why I make the claim that tenants don't pay property taxes.

jafs 3 years, 5 months ago

Yes.

But you're incorrect.

Unless a tenant can find a cheaper place to live, which is unlikely since all landlords want to make a profit, market forces don't bring rents down.

Your comparison of apartment buildings to single family homes is possibly right, I don't know for sure, but living in an apartment is rather different from living in a single family house.

Some people may want to pay a bit less and do that, but others want to live in single family houses.

If somebody can't buy rental property in town, rent it at market prices, and make a profit, they won't do it.

Renters pay all of their landlord's expenses, and a bit more - that's where the profit comes in.

Brock Masters 3 years, 5 months ago

What you say is generally correct, but not absolute. Some people will invest in a rental property and not expect to recoup the entire mortgage from the rent. Instead, they view it as an investment with the rent offsetting some, but not all cost. They use the property to offset their tax liability and hope to realize a profit when the home appreciates in value.

jafs 3 years, 5 months ago

I've never known a landlord who did that.

It sounds like a risky investment to me, and a bad idea.

And it points to some problems with our tax code as well.

jhawkinsf 3 years, 5 months ago

Jafs, let me give you a similar scenario, one that is both risky yet very common. A person invests in the stock market, buying a particular company, say 100 shares at $25/share. The company pays a dividend but the investor chooses to reinvest that dividend into the company. It's a common practice. Now after year one, having reinvested my dividend, I might own 102 shares. After three years, 108 (it was a good year) and after four years I own 109 (a bad year). During those years, the price of the stock went as high as $35/share and as low as $15. It's all very common. Now back to the landlord. he may see the value of the home as his long term investment. Rather than taking a percentage of the rent out each month, he simply pays down the mortgage. His goal is long term, much like the stock owner who rather than taking the dividend, he reinvests it. The landlord is hoping that the value of the home has gone up from the time of the initial purchase. Good thinking if one looks in terms of decades rather than 2-3 years. The landlord won't see a profit until he either sells off the house or the mortgage is paid off, or both.

jafs 3 years, 5 months ago

Ok.

The stock market is also risky, even if one thinks "long term", because there's no way to know what the market will be doing when one wants or needs to take money out.

Just ask all of the folks who recently lost scads of money in their 401K plans.

Do you know any landlords who think and act like that personally?

jhawkinsf 3 years, 5 months ago

Can't say that I know any landlords at all.

Brock Masters 3 years, 5 months ago

"Wow. Great logic fred. rolling my eyes

When you buy a product the companies spreads out the costs of that product (to include the taxes they pay) amongst the number of units they estimate to sell."

It is great logic as my example is very analogous as the property tax on apartments and other multi-unit rental properties are spread out among the tenants. However, this is not to be confused with the tenants actually paying property tax. They do bear the cost of the property as reflected in their rents, but they do not actually pay it.

And think about this. You rent a house and pay yoiur rent, but the landlord doesn't pay the property tax. Who is in default? Not the tenant, but the landlord who owns the house so again the renter didn't pay the tax with their rent. If they did, the property tax would have been paid.

Now, someone purchasing gasoline does pay the taxes. The retailer collects the tax and passes it onto the department of revenue and federal government. Just like sales tax. The consumer pays it and the retailer collects it. This is different than a landlord. The landlord doesn't collect property tax and passes it on, they actually pay it.

You can continue to debat the issue, but the fact is the renter does not actually pay the property tax. Yes, their rent is most likely based in part on the cost of the property tax so they indirectly contribute to its payment, but this is not the same as saying they pay the property tax.

Brock Masters 3 years, 5 months ago

Wow, who can argue with the brillant summary. You win.

Brock Masters 3 years, 5 months ago

Jesse give it a rest you've been declared the winner.

Linda Endicott 3 years, 5 months ago

I didn't call you a jerk...I said you were starting to be a jerk about it...

There's a difference...

You don't make many friends by beating that dead horse, do you?

Katara 3 years, 5 months ago

I understand exactly how the homestead credit works. It is not based on the amount of rent one pays. The property tax is figured as a percentage of the rent one pays.

So if a renter is not paying property tax, how is it that the homestead credit figures out the percentage of rent that goes to property tax and then refunds the amount (based on the renter's income)?

jhawkinsf 3 years, 5 months ago

So if a renter totally trashes a house, forcing the landlord to invest thousands for repairs, what the renter has really done is stimulate the economy. He's responsible for the hiring of carpenters and plumbers, painters and electricians.
Using that logic, we should view trashing of a rental unit as a good thing. Newspeak on steroids.

jhawkinsf 3 years, 5 months ago

So one person can say that renters pay for the property taxes while another can say that he doesn't, the truth being "depending on your perspective".

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