Besides engaging in his blame game with the Assembly about the level of the budget, our mayor, Dave Bronson, continues to be a fountain of misinformation. In his recent letter which accompanied property tax notices, he only addressed the idea that homeowners pay property taxes — when, in fact, all “property users” pay property taxes. This includes renters, various other constituents and customers of any business, and nonprofit institutions.
Property taxes are a cost that property owners pass along to property users — when Carr’s, Fred Meyer, Home Depot and Walmart price their products, they set their prices so that they collect enough in revenue to pay for all their costs (including property taxes) over the long run. The owners of rental properties do the same. This is called tax shifting; businesses and landlords pass along property taxes to their customers in the form of higher prices. Property taxes are no different than any other cost that landowners (businesses and landlords) face.
If property taxes increase, it is not immediately passed on in the form of higher rents, but over time, adjustments are made because of this change in costs. Likewise, if property taxes were reduced, the new lower costs would be reflected in reduced prices and rents for property users over time. The process is symmetrical, but it is not instantaneous.
Our mayor should know this, one would think. But instead, he peddled this idea (occasionally having traction in other letters to the editor) that only property owners pay taxes, to the exclusion of other property users. Partially, this may stem from ideas within conservative ranks that everyone in the lower income categories is on the dole, at the government trough — the idea of poor people paying taxes challenges their long-held biases. It is not clear why our mayor is trying to curry favor of homeowners, but renters also pay taxes. Maybe he sees homeowners as his base.
As mayor, he needs to be better informed, and let the citizenry know that. It is disingenuous to tout that property owners are the only property taxpayers, and the mayor should know better. One advantage of property taxes is that they are thought, by many who understand how markets work, to be taxes that are somewhat proportional; they take a similar proportion of everyone’s income.
Every few years, a proposal to replace part of the property tax with a sales tax makes it to a referendum in Anchorage. Luckily, these proposals have been soundly defeated, because most sales taxes are seen as regressive taxes, taxing lower-income persons at a higher rate than is paid by high-income households.
Nonetheless, people need to understand that all property users (including renters) pay property taxes. Not just homeowners! Maybe his honor will realize this also.
— P.J. Hill
Anchorage
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