A new high court ruling has the potential to reduce the property tax revenue needs of states across the US. Will we see new savings, or will this added tax just add to the burden?
New York State Taxes
New York is notorious for its taxes. It’s infamous in general for its housing and cost of living. It’s a high tax state where individuals and property owners pay a whole array of taxes including state income tax, sales taxes, tolls and some of the highest property taxes in the nation. Many have been fearing these continually rising taxes are going to drive away talented entrepreneurs, startups, businesses and investment. Especially after the new tax bill which further caps tax deductions.
Reliance on Property Taxes
Some of America’s states have become highly reliant on property tax revenues. North Dakota has the lowest level of reliance on property taxes according to the Tax Foundation. Only 13.3% of the states taxes come from property taxes. Rates in Florida and Pennsylvania have been around 30%. Yet, FL has no state income taxes, reducing the overall tax burden. PA is currently working on eliminating property taxes altogether. Around 30% of NY’s tax income also comes from property taxes receipts. However, higher tax rates and other taxes make it more expensive.
New High Court Ruling on Taxes
A new high court ruling in June 2018 now empowers individual states to collect sales taxes on online sales. Companies like Walmart and Target have reportedly long complained that they are at a disadvantage to Amazon and millions of small online businesses and entrepreneurs who often don’t have to collect or pay sales taxes on their online services. Now states are likely to be quick to implement new taxes and enforcement of their own.
Who Loses Out
Consumers may have to say goodbye to the online deals they’ve been getting, raising the cost of living. Businesses can lose out, and entrepreneurs will struggle harder to find opportunities that work. That could be bad for employers, workers, and all types of consumers. Especially those already stretched on their budgets.
The Impact on Property Taxes
Theoretically this new windfall of taxes worth billions of dollars each year should enable NY and its taxing authorities to reduce the burden on property owners. Current reliance on property taxes can be offset with these new taxes. This could be the opportune time to phase property taxes out.
Any decline in demand for business property and housing due to higher overall taxes and costs of doing business could soften property values and overall tax revenues. Providing individuals and local business owners fight for accurate tax assessments as these changes happen their bills could drop. Though this may become even more essential if fewer properties are being used and are paying taxes.
It might not be wise to hold our breath in hope of property taxes finally being retired in NY, but these new rules definitely leave fewer arguments for raising property taxes and clinging to them so much.
For now, hope for the best, prepare for more taxes coming out of your income, and keep appealing your property tax bills.