RE: Prop Tax Talk

Hey Candy, I call B.S. on that article. Not because it is wrong, that is a valid argument, but because it is biased. There are two sides to the disclosure argument and the News is clearly advocating the side of mandatory disclosure. Just look at the lead: “However, owners of many high-dollar homes are still getting a deal.” They are? Says who?

Let me play devil’s advocate for a moment:

1) It’s the commercial side that gives county appraisers the most trouble, MLS has an agreement with Dallas to privately allow access to sales prices, so the residential side doesn’t run as much interference on what’s market value. (DCAD appraiser Ken Nolan is even quoted in the article, “I’m confident our residential values are close to market value,” says Nolan. Still, he acknowledges high-end homes are a challenge.”)

2) Some argue that knowing what a property sells for would automatically raise the appraisal value, which, they say, would be bad A) there are many factors beyond simple sales price information that an appraiser must take into account in an overall appraisal assessment. B) Bumping up an appraisal value based on price creates bubble markets which, as we’ve seen of late, have a tendency to crash and burn.

Read on for more of the other side the News left out:

It’s not just high-end properties that “get a deal”, if there is such a thing. I spoke to a historic preservationist working in Oak Cliff yesterday on this topic and his argument is that mandatory disclosure would put him out of business, he’s invested much more into run-down properties than they are currently worth and disclosing the price would make his tax appraisals jump to a bracket he and his target buyers couldn’t afford. He also said that, to combat this, sellers would keep prices artificially low in emerging neighborhoods, thereby hindering chances for revitalization.

Now, on the other side of that is theory that the general public is missing out on tax revenue that should be coming from high-end properties or commercial properties which have been undervalued. However, two professors writing in Social Science Quarterly in 2004 arguing pro-mandatory disclosure did write that disclosure doesn’t necessarily fix issues of equitability. “There is fairly rich empirical literature identifying such occurrences,” the profs said of the continued problems.

Of course there is the other side that says market prices would be more on target with disclosure and would require less protests from property owners. For more on that argument, look up the Texas Association of Appraisal Districts.

The Oak Cliff businessman said something interesting to me, “Without an income tax, we have to rely too much on real-estate taxes to pay for government operations. It’s the same reason that we can’t reach critical-mass funding for public transportation: Too many sales-tax dollars go to pay for things that most states pay for with income taxes. This stress has led legislators to adopt a corporate income tax, which in a grand lie they call a “franchise” tax.”

So maybe mandatory disclosure isn’t the answer, maybe it’s a state income tax. Don’t know if that’s true, but there’s the other side of the argument.

P.S. I wrote a story on the pros and cons of this issue (yes, both sides), which comes out this Friday. I’ll make sure to link it here.