http://cfo.dc.gov/cfo/frames.asp?doc=/cfo/lib/cfo/09STUDY.pdf is an interesting report comparing taxes (income, property, sales, auto) across big cities in the U.S. Most interesting to me is the large variation in tax burden across cities that seem to offer fairly comparable levels of service (see page 14, for example). From a group of families at different income levels, for example, New York City and Philadelphia take in $46-49,000/year. Boston, which has more expenses for harsh weather, makes do with $36,330. Seattle is able to run a nice city for $24,145 while Los Angeles needs $41,368 to keep its residents stuck in traffic 24/7.
10 thoughts on “Taxes compared across cities and states”
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I am always amused how you turn simple numbers into bitter irony 😉
What is behind these differences ($24,145 vs $49,000)?
Also, if you count in weather in Boston, what about earthquakes (and fire) in LA?
What difference management and financial skills in government possibly cause?
I am a little confused about this data. Philadelphia has ridiculously low property taxes. I have a friend living in a brand new construction purchased for around $450K a few years ago paying double digit taxes on it. I can’t remember the exact amount but it was something like $86. 6 apartment rental building sold around the top of the bubble for over a million is taxed at around $650. I know a couple moving in from NJ who kept asking their agent about misprints since they thought at least one digit is missing. Also food and clothing are not taxed in PA. Processed stuff like soda is but none of your fruits, veggies, eggs, mils, cheese, meat; nor pants, shirts, shoes. State income tax of 3% is also quite low. Philadelphia itself though has quite high income tax of almost 4%.
Tekumse: I’m glad that your friend is paying $86/year in property tax, but I’m not sure why this is a subject for anecdotes and conjecture. Aside from the aggregate data used by the DC government, Zillow.com, for example, shows actual houses and the actual property tax bills. http://www.zillow.com/homedetails/924-Catharine-St-Philadelphia-PA-19147/10181510_zpid/#{scid=hdp-site-map-list-address} is a house listed for sale at $445,000 (similar to your friend’s). The taxes paid in 2009 and 2010 were $2282/year. http://www.zillow.com/homedetails/515-S-10th-St-APT-G-Philadelphia-PA-19147/10197359_zpid/#{scid=hdp-site-map-list-address} is a $500,000 house with taxes of $4362/year. I couldn’t find anything remotely resembling the $86/year deal that you described.
http://www.philly.com/philly/hot_topics/39325332.html indicates that there is some corruption and incompetence involved in the valuation process. Perhaps your friend has a friend in City Hall.
Cities have different costs of living; NYC is famously expensive. Presumably gov’t employees must be paid sufficiently to be able to live there. I’m not saying that this is reason for the tax differences (e.g., it doesn’t explain Los Angeles), but it does question the assumption behind your post, namely, that all cities should be the same.
Interesting that Table 14 was displayed as a sum of the burden for 4 families, as opposed to an average; while the numbers may be accurate, I never think about the cost of 4 families doing anything. (Cost of 2 mortgages and 2 rents and 6 car payments?)
Looks like the single largest driver of the low cost cities is the lack of state/city income tax.
But I guess once you get used to the weather in California, it is worth the $6300/yr/family to sit in traffic and not live in Boston.
What’s more interesting is the different tax regimes in adjacent states–live in Washington (no income tax) and shop in Oregon (no sales tax) and you could save yourself quite a bit of money, assuming poor use tax enforcement.
Apparently it is a limited deal (20 or 30 years) as a stimulus to the developer for cleaning up blight. Here is an example of $264 tax for a house sold in 2004 for $405K. http://www.zillow.com/homedetails/595-Barnes-St-Philadelphia-PA-19128/80952150_zpid/
Here is example closer to where the NJ couple were looking with $857 tax despite the $420K price tag in 2004:
http://www.zillow.com/homedetails/2339-Wallace-St-B-Philadelphia-PA-19130/62676220_zpid/#{scid=hdp-site-map-bubble-address}
Frank: New York City is expensive for folks who want to buy a townhouse on Park Avenue, but a city employee who lives in Yonkers or Staten Island need not earn like a Wall Streeter. Also, New York City should enjoy some reduced costs compared to less densely populated places, e.g., fewer roads/person to maintain and reduced transportation costs (a city employee can ride the subway or walk rather than take an official vehicle).
The “Manhattan” effect does not explain the high costs in Philadelphia relative to Boston. Housing is cheaper than in Boston. salary.com says that the cost of living in Philadelphia, overall, is 14 percent lower than in Boston and typical employers (not sure if it includes government employers as well) pay 5 percent less in Philadelphia.
This might explain Philadelphia. The people are simply poorer:
Every school in the School District of Philadelphia satisfies the federal definition of a “low-income school,” meaning at least 30 percent of their students are low-income. In the least poor school, Greenberg, the rate is 44 percent.
More than three-fourths of the children who attend Philadelphia public schools qualify for free or reduced price lunch.
In 74 of 267 Philadelphia District schools, over 90 percent of the student body qualifies for free or reduced price lunch.
A third of Philadelphia’s children and a quarter of its residents overall live below the poverty line, making it the poorest of the nation’s 10 biggest cities.
As far as I know most of the affluent people live in the suburbs around the Main Line.
tekumse: I think you’re proving Edward Tufte’s point that it is almost never useful to present numbers without a “compared to what”. More than three-fourths of Philadelphia public school students qualify for a subsidized lunch? http://www.bostonpublicschools.org/news/boston-high-school-reform-efforts-gain-momentum-grant says that 71 percent of Boston public school students similarly qualify. Philadelphia has affluent suburbs? Weston and Newton, Massachusetts aren’t exactly blighted according to the Census Bureau.
I’m a little shaky on how accurate these numbers might be. But I did get a kick out of sample family one, showing $570 interest income with a gross income of $25,000. I’m pretty sure most poverty level families of three would have blown the savings account years ago.