A letter in the February 27, 2008 Wichita Eagle makes the case that using property tax increases to fund improvements to Wichita public schools gives renters a “free ride.” This is because renters, as they don’t own the homes they live in, escape paying property taxes. This is distinguished from homeowners, who “pay for everything,” according to the letter writer.
In Kansas, residential rental property pays property tax at the same rate as homes. It is true that the property tax bill goes to the landlord, not the renter. This property tax, however, is a cost that goes into determining what landlords want to charge for rent. This tax affects all rental properties at the same rate; I don’t think there is much opportunity for one landlord to be more “efficient” regarding property taxes than others, so these property taxes are pretty much passed on to the renter. Therefore, renters pay, too. We can expect rents to rise when property taxes increase.
A greater problem is in the property taxes that businesses and utilities pay. Residential property is assessed at 11.5% of appraised value. Business and utility property, however, is assessed at 25% and 33%, respectively. Again, both businesses and utilities seek to pass on their costs to the customers to the extent possible. This means that anyone who buys something from a business located within the boundaries of USD 259, or who consumes electricity, natural gas, telephone service, or other utility services within the same area, may face increased prices, should the bond issue pass.
For example, Simon Property Group LP, an owner of shopping malls in Wichita, is the seventh largest taxpayer to USD 259, accounting for .43% of the assessed valuation in the district. Together, Western Resources (the electric company), Southwestern Bell Telephone (the phone company that some people still use), and Kansas Gas Service (the natural gas company) represent 3.69% of the assessed value within USD 259, presumably paying the same proportion of the tax revenue collected. Customers of these companies will likely face price increases should the bond issue pass.
These increased prices affect renters and property owners equally. It’s pretty hard to avoid paying these taxes.
Other articles on this topic:
Wichita School District Arithmetic
Wichita School District Tax Revenues Rise Rapidly
Wichita Public School Spending and Enrollment
Wichita School Bond Issue Impact Is an Illusion
Wichita School Bond Issue Not the Only Proposed Tax Increase
Wichita School Bond Issue: Don’t Indulge Superstition
Interesting topic,I like your blog.