Mad About Your Property Taxes?

You shouldn't be. Property taxes are what make a neighborhood a home, but people seem not to understand that

Parks are not built and maintained for free. Your tax dollars generally fund them. Photo by Laura Alvarez on Unsplash

A Twit with 11K followers recently posted this:

“I’m 30 years old & I can’t grasp property taxes. So like even if the house is paid off in full…the government still owns the plot of land that the house is on? LMAO”

This brought out all the “taxation is theft” idiots as well as a few other people like me who wondered how anybody who says she has a paid-off house at age 30 manages not to understand property taxes.

Everything I say in this piece comes from my knowledge gained as a journalist in Illinois. I can’t speak to differences in the law in other states, but most things will be similar.

Your tax assessor sends you a letter every single year that tells you exactly where all your property taxes are going. Mine go to my city government but also to the elementary and high school districts – they’re separate entities where I live. I pay into my local library and park district. Some money goes to my local township and road district. Yours will vary.

It’s easy to get this information

Like I said, you get a notification every year. The information is probably online, too.

As a young reporter, I attended city council meetings, park boards and school boards all the time. I pored over their budgets. More people should. You’d learn a lot, and you’d probably develop a bit more respect for the people who spend your local tax dollars, because I’ve never seen a local board throw money around. Those people pay the same taxes you do, and they are a part of your community. People aren’t shy about talking to them in the grocery store.

One night, a man showed up at a city council meeting in Washington IL. He was spitting mad about his tax bill and how the city was stealing too much of his hard-earned money. He had developed quite a head of steam and was ready to explode, when the mayor asked him to repeat his address for the record. I smiled when I heard the address because I knew exactly what was coming. 

“You don’t even live here,” the mayor – not totally able to contain his glee – told the man. “So you don’t pay any taxes at all to Washington.” 

It’s not uncommon, at least in my area, to have a mailing address that is different from the city where you technically reside. I myself had a Washington address at the time but actually lived within the city limits of East Peoria. So did the man at the meeting.

Another thing people tend not to understand – even though it’s laid out in black and white for you every single year – is that the bulk of the property taxes (for most of us) goes not to the municipality but to the schools. But people tend to believe the city gets it all.

Property taxes vary a lot from area to area, partly because every place has a slightly different way of funding basic government functions. You might save a bit in one way but you’re going to pay another, because you have to pay your teachers and road crews somehow.

If you like having good schools and libraries, if you like having the snow plowed from your streets and having parks for your kids to play, don’t complain about your property taxes. All the things that make your neighborhood work depend on them.

That’s not to say you have to love paying the bill

My property taxes are much higher than people in some other parts of the country pay. Partly that’s because Illinois pays its teachers well. I am personally paying almost a thousand dollars per year just to my grade school district, and more than $600 to my high school district, plus a hundred or so bucks to the park and library and almost $300 to the city. It comes to $2,756 this year. And this is for a house valued at just above $100K. Illinois property taxes are crazy. You can compare your state’s rates on the Motley Fool site.

Some of those states that are renowned for their low taxes stint on their teacher salaries. Click to see what the average teacher salary is by state according to the World Population Review. You have to remember these averages are only part of the story. In Illinois, the average teacher salary is $74,916, but the average starting salary is $43,515. 

I was married to an Illinois chemistry and physics teacher for 15 years. His first year teaching in a public school, he made only $19K, but when he retired at age 58, he was making just under $100K. Save your tears for the Walter Whites in other states – Illinois teachers, after the first few years, generally do just fine.

But I think education should be mostly funded by the federal government. Why should some kids get inferior educations based on where they live? They shouldn’t. 

We’d soon see some dramatic changes in housing prices if every district was equally well-funded regardless of how expensive the houses were in that district. Families could buy cheaper houses without worrying about the quality of the schools. Socio-economic bubbles would at least stretch, if not burst.

Property taxes are wildly different

The New York Times has a weekly feature I just love. They feature three houses in different parts of the country that cost about the same amount of money. Often, one is a large and gorgeous older home in a cheaper area and another is a tiny space in an expensive city and the third is somewhere in between. They compare the amenities and price per square foot and they give the annual property taxes, which vary dramatically. 

Looked at one way, property taxes are more fair than other taxes. If you favor a flat-rate income tax (I don’t) you should love property taxes, because everyone is paying the same rate. If you live in a tiny cottage that’s not worth much, you’re paying the same rate as the guy on the hill with a seven-bedroom mansion – but not the same amount. 

The math is so easy even a journalism major like me can do it, because your taxes follow a very simple formula: Your Equalized Assessed Value times the rate equals your tax bill. 

When everyone’s home values go up, you’ll hear grousing that the increased value of their house is going to mean an increase in their property taxes. 

But those people don’t understand how this works: Your taxes don’t increase because of a general rise in property values in your area. Now, if you just put an addition on your house and your house rises in value beyond the general tide that’s raising all home prices, yes, your taxes will go up, but that’s different from a general rise that’s affecting the whole area. If your house was under-assessed and they’re adjusting the EAV to the higher amount it ought to have been at before, then your individual taxes may also rise.

But let’s say in your area, pretty much everybody’s home values rose by a few percent. That does not mean your property taxes are going to go up unless the taxing bodies increase their levy. If your city levied $25 million last year and kept that amount the same the following year, and your house didn’t go up or down in value more than everybody else’s, you can expect the tax bill to be the same and for that taxing bodies’ rate to drop. EAV times the rate equals your tax bill. 

The city (or other taxing body) doesn’t set the rate. Math does. The city sets its levy amount, which is then divided by the assessed value and that gives you the levy rate.

Obviously, there’s a lot more to this – new houses that weren’t on the tax rolls previously and state and local laws that govern things like how much an entity can increase its tax levy each year all complicate this. And farm ground is a whole other topic.

But the system in general makes sense. 

It takes money to support a community. Even if you don’t have kids in school, you surely don’t wish to be surrounded by illiterate people. Maybe you don’t go to your park or library, but you should understand that most people looking for a place to live want to be where they can read books for free, take their kids to story hour and let them run around in a green space with other kids.

Maybe you never walk on sidewalks. Maybe you never leave your house at all and have everything delivered to you, but even so, Amazon’s drivers need the streets around your house to be drivable. 

You’re a part of your community to some degree even if you are an old sourpuss who never uses a single public amenity. The livability of your neighborhood is part of what holds up your home value. If you don’t want to pay for civilization, you should go live in a primitive cabin in the wilderness.

About Michelle Teheux

I’m a writer in central Illinois. If you like my work, subscribe to me here or on Medium. My new book is The Trailer Park Rules. Tips accepted here.