I’d like a property taxes and pepperoni pizza
I’m about to drop some tax knowledge using culinary analogies.
Among the concerns about Alternative 4 of the Comprehensive Growth Management Plan is the fear that the creation of 8,000 new lots in rural lands will raise property taxes. County Assessor Peter Van Nortwick, who hasn’t been shy in his support of Alternative 4, said at Tuesday’s council meeting that’s not entirely true.
Tax increases “would only happen if people’s value increases more than everyone else’s value,” Van Nortwick said. “If someone’s property taxes are increasing, the rest of our property taxes are decreasing.”
But as was pointed out to me several times, Van Nortwick told the council more than a year ago, when Alt 4 was just an idea, that tax rates are certain to increase if people are further allowed to subdivide their properties.
“What you are doing is you’re making their property more valuable,” Van Nortwick told the then-commissioners. “And when you make their property more valuable, the percent of the total value of the county goes up, and that’s why it shifts over. You’re only going to get that property tax shift if you actually increase the value of their property.”
So which is it? Will taxes increase or decrease?
Kind of both.
Van Nortwick explained it to me Thursday in terms I can understand: with pizza.
Say you and your buddy are buying a pizza valued at $12. He gets half, you get the other half. You can’t cut it up. You can’t divide it. You’re going to eat your half of a pizza and you’re going to be happy about it. So you each are going to pay $6, right?
Now try this scenario. Your buddy gets to divide his half into three slices. The ability to subdivide his pizza, however, comes with a cost—the pizza is worth more. Now he has to pay $3 for each slice or $9 for the half. But the pizza itself is still only worth $12—taxes are a “zero-sum game,” Van Nortwick said—so you only have to pay $3 for your half.
So what does this mean for landowners? Yes, if your property can be subdivided, it’s worth more, and therefore, your property taxes are higher. However, because your taxes are just a part of a whole, that means the rest of the county’s taxes actually decrease.
Unless, of course, voters approve levies or the council approves a property tax increase, in which case, of course your taxes will go up.
If you’re confused or doubt what Van Nortwick explained, you’re not the only one.
“Your explanation?” Councilor Jeanne Stewart told him Tuesday. “Let me just say it. I’m not buying it. I think it’s only a piece of a picture. I don’t think it’s the reality of what is going to hit people over the next couple years.”