How much is that proposed property tax increase really going to cost you?
About three months of your retirement.
Proponents claim that the average Denver homeowner will only have to pay $62 a year.
Well, I happen to be Mr. Average Denver homeowner, I own a house valued at $255,000. I'm just over 40, which means I have about 30 years to go until I'm supposed to retire. Make that 30 years and 3 months.
Let's assume that the city government is never, ever, even under the threat of waterboarding, going to let me have this money back. They'll ask nicely, if they must, but the Light Rail Tax will follow the Coors Field Stadium Tax (Wait Till Next Year!) as the night follows the day, and, to mix metaphors, we'll end up having to pry our money loose from their cold, dead hands. This means that even if I'm able to sell my house somewhere down the line, the buyer, rational man that he is, will reduce what he's willing to pay by the after-tax amount of this tax he'll take on, as long as both he and the house shall live.
As for the amount of the tax itself, it's not going to stay constant at $62 (or about $46.50 after tax, since it's a deductible expense, at least until Charlie Rangel gets his glummies on the tax code). My house will, over time, appreciate in value. Let's call it about 4% a year, a pretty conservative number, all things considered. I bought a condo in 1989 at the top of the DC housing market, watched it decline about 30% in value, and then rebound to over double its low point. This condo appreciated at about 3% a year, and condos don't do nearly as well as houses over time.
Finally, remember that I'm going to be investing this money, too. About 8% a year is a good, solid guess, assuming that I'm not buying T-bills with it and that we don't have to live through 1930-31 again.
Put all these numbers together, and you get $8560 post-tax, inflation-adjusted. Thirty years from now, I've paid off the mortgage, and all other things being equal, $2900 in current dollars is a reasonable amount to live on.
That's three months of my retirement - and yours - that the Denver City Government wants to take from us.
Progressively More Expensive. Progressively More Intrusive. Progressively More Restrictive.
