Jul 21 2008
Are Taxes to Blame for Baltimore’s Decline?
A recent opinion editorial in the Wall Street Journal blamed Baltimore’s decline, after which only now the city is recovering, to high taxes.? While the piece probably oversimplifies the city’s woes over the past 50 years, you can’t help but think about how much the city’s tax rates affect population and development.? Some have questioned the statistics quoted in the piece, so take it with a grain of salt.
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6 Comments to “Are Taxes to Blame for Baltimore’s Decline?”
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Beware of academics with an agenda.
The writers totally ignore other issues that might be at play like, oh let’s see… the national suburbanization trend that pulled people out of cities 40 years ago. They also ignore the trends that are bringing people back in to the city.
It would be interesting to see what proportion of the people who are moving into the City are buying property rather than renting. Of course, the housing downturn would skew the stats, but what else is new?
To downtownmike’s point, there is another interesting article on the WSJ site that talks about the recent trends in many cities of whites returning to the cities from the suburbs and the strong reversal of the white flight of the past 40 years. They also talk about the movement of black and Hispanic families to the suburbs.
They don’t talk about Baltimore, but do mention Washington, Atlanta and San Francisco.
The taxes on new construction are ridiculously high. I have heard numbers like $15,000/year on a $600,000 property. Is Baltimore city’s tax rate higher than comparable cities? Taxes on rehabbed properties aren’t as bad (mine is $3k on a $400,000 property). But I assume that’s mainly because the property assessments haven’t caught up yet. is there a limit on how much taxes can “catch up” each year?
The WSJ article is pretty off-base on some points. “The suburbs are thriving even with the center city decaying.” - They ignore all the development around the harbor. Much of the city is not decaying. They also ignore how many of the suburbs - especially areas of Baltimore county - are in pretty bad shape; crime, poverty, etc.
To the earlier post about reverse White flight - this is pretty apparent in SE DC now. Areas that used to be the worst in the country (in terms of crime) are now seeing a lot of development and new residents. While the former poor residents are relocating across the river to PG county.
BmoreRob-
Yes, there is a limit on how much your property taxes can “catch up” each year. The city has a “phase in” scheme where it only goes up a certain amount each year. An accountant could probably tell you the exact equation!
As far as Jeff’s post about car costs adding to the cost of living in suburbia, this is spot on. In response to the person who writes about jobs being in the suburbs, I have two solutions:
1. Car Pool
2. Mass Transit
There are plenty of Old Timers in Baltimore who remember cable cars! Yes, they used to have them here. The city’s mass transit currently is a hodgepodge of overcrowded buses, light rail, and even a subway system. It needs to be modernized and made more efficient.
BmoreRob,
I wish I could find out if Baltimore’s tax rate is higher than other cities, but the info isn’t compiled well. Or maybe I just haven’t found it yet.
As for how much taxes can catch up, there is a limit… If you apply for it. The limit imposed by the state of Maryland is 10%, which is dictated by the Maryland Homestead Tax Credit (http://www.dat.state.md.us/sdatweb/homestead.html). Note that you have to apply for this credit, and it is not automatic.
Joshua (on carpooling etc)
easier said than done: A 30 mile trip costs me average $5.35 in todays gas prices and takes about 35 minutes. Mass transit would cost me more and take me about 3 times as long to go to where I have to. Mass Transit is a non starter in Maryland as of now…
And carpooling isn’t a trend yet in B City, much less to where I have to go. And the VA sluglines aren’t that fun either!
baltimorerowhouse:
I think property taxes in DC are definitely lower. Even Manhattan is lower. San Francisco I hear are comparable or higher.
Look at DC these days. Its a total boomtown. Why? Because there are tons of jobs there!