“Experts” in Austin with Austin Afforadbility are advocating cutting Austin’s tax rate as a way to make Austin more affordable.
I agree that we need to address affordability, but we need to do it with more abundant housing. Tax rates are not the driver of un-affordable housing in Austin. Let’s look at my house:
- In 2013 my house was valued at $168,385
My total tax rate was 2.463200% with a final tax bill of 4,147.66 without exemptions.
Now let’s say Austin lowered my tax rate to 2.2% (and .2% is a huge chunk since only .5% of my bill goes the COA currently).
- My total tax bill would be $3,704.47 without exemptions.
Difference of $443.19. Pretty sweet right?
- Let’s say in 2014 my house valuation goes up the maximum 10% to $185,223.50
- If the tax rate stays the same at 2.463200 my final tax bill jumps to $4562.43
- If Austin lowered my tax rate to 2.2%
- My total tax bill would be $4,074.92
An even better savings of $487.51!
Oh, but look. By my house increasing in value by 10% my tax bill jumped by $414.77 at the current rate, and $307.45 with the slashed rate. One more year of a 10% increase in property valuation and the effect of that tax cut that slashed the city revenue almost in half will be completely gone.
In less than two years of maximum increases in property value I will have completely eradicated any benefit of a significant property tax cut.
Cutting taxes is a shortcut to affordability, but it’s not a long term solution. The only long term solution for housing affordability is slowing the growth of home valuations by providing more abundant housing choices and supply. Abundant housing supply also helps not only those on fixed incomes, but the young and families as well.