A Much Forgotten But Fast Growing Expense Reminder: Personal Property Taxes!

With multiple inner circle friends and clients expressing fatigue at the escalating Property Tax bill… we set off to do some research. Our most interesting findings are when we feel like we are on an island, and no one else is discussing a subject …

With very little public information on the subject of Personal Property Taxes (think Home/Car) in just a step for steppers like fashion, we turned to our investment resources for some possible clarity –

It took us a lot longer than we thought to find sources that would connect the dots of the puzzle of escalating Property Taxes, but here is what we found!

Total US Property Tax Collections 1987 to Present

US State Local Property Taxes 1988 to 2018

Total Property Tax Percentage Change Year Over Year 1987 to 2018

US State and Local Property Tax Percentage Increase 1987 to 2018

The average annual increase since 1987 is 4.8%%  Why?

Case Shiller National Home Price Index 1987 to 2018

Case Shiller Average Home Price 1987 to 2019

Oh no ….

This is an annual 3.9% growth from 1987 to present –

So asset prices have increased at a 3.9% pace over the last 30 years but taxes at 4.8%?

May not seem like much, but over time IT IS….

3.9 V 4.8 House Growth Versus Tax Growth

We do not want you to think conspiracy or other… just be aware that tax rates are growing faster than assets rates…. oddly, per our Social Security Retirement discussion, wage growth is growing much faster than inflation…leading to a better standard of living, which tax rates are more correlated with…. additionally there are certain municipalities across the country that have struggling finances and are taking more aggressive measures to shore up the coffers.

Bottom line: Property Taxes are growing at a rate MUCH faster than our assets … if you are buying an asset, especially a house, keep an eye on the Property Tax Amount!

Have a Great “Tax Growth versus Asset Growth Rate” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.

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