Comparing taxes in different states

When I first considered a move to Connecticut, nearly everyone here that I spoke with prior to my move lamented how high the property taxes were in this state. That same concern frequently occurs when residents contact me to voice frustration with the town on an issue: “I pay this much in taxes and I expect you to do something about it.” Let me share a short comparison of how Winchester’s property taxes compare to my former home in Michigan.Similar to Connecticut, Michigan principally uses property taxes to fund local government and income taxes to fund state government. One mil of taxation in Michigan is the same as one mil of taxation in Connecticut — $1 for every $1,000 of value. The taxable value of property, though, differs in each state. In Connecticut, a property is taxed at 70 percent of its value; in Michigan, 50 percent. So, my home in Michigan (currently valued at $160,000) is taxed in that state at $80,000, whereas in this state, it would be taxed at $112,000. Admittedly, that is a sizeable difference in value.The taxable value of $112,000, at the approximately 25.5 mils levied in Winchester, means that my property tax bill here would be roughly $2,856. In Linden, Mich., my property with the taxable value of only $80,000 has a 39.5 mil levy, a tax bill of roughly $3,160.What will add even more to my Michigan tax bill (until I sell that house) is the loss of a key exemption. The state of Michigan levies 18 mils on property (for school operations), but property which is utilized as a principal residence is exempt from that large levy. These additional 18 mils for school operations are automatically levied on all commercial and industrial property, as well as “second” homes. So, since I no longer can claim the Linden house as my principal residence, my annual tax levy will be about 55.5 mils, resulting in an annual property tax bill of $4,400.On the Michigan tax bill, several levies are listed, encompassing a variety of taxing authorities: county operations (Michigan utilizes county-level government much more extensively than Connecticut for such functions as assessing, land and vital records, planning, elections and some smaller agencies); other county services such as paramedics, parks, senior citizens and health care assistance, libraries, transit and an airport (all of which were voted–approved); and several education-related levies. Although funded through property taxes, education is distinct from municipal government.Of the 39.5 mils (55.5 mils, non-homestead) levied upon my property, approximately 17.7 (35.7, non-homestead) mils were related to education. The remainder was for the county operations and services described above, and the final 11.1 mils were related to city operations, such as general government, public safety, public works, building and grounds, parks and cemeteries.The description of each levy on the Michigan tax bill made discussions with residents much easier. Residents, who would pay their tax bill in its entirety (two payments, similar to Connecticut) at City Hall, would voice their frustration with the amount of taxes they were paying to the city. By referring to the tax bill, I could demonstrate that only about a third of their taxes supported the city; the other two-thirds went to the schools (at the local, county or state level).Over the past several years, given the declining housing market as well as a few state constitution factors, the amount paid for most city taxes has actually declined. In conjunction with the state of Michigan reducing state aid to cities and villages, the ability to continue to provide the same level of services was becoming incredibly challenging.When those same residents inquired what their tax dollars were supporting outside of the city (why actually read the bill, right?), they would announce that they didn’t support the milage for, say, the county transit (“I never ride the bus!”). Well, the voters, your neighbors, obviously supported it sufficiently to levy the tax county-wide, so that means everyone, including you, must pay the tax. Ironically, when voted on to renew the several levies, the taxes are invariably renewed. In Michigan, at least, it is our neighbors that raise the taxes, not the politicians!From a levy perspective, the taxes here in Winchester are not out of line with at least one other state, and, in fact, are slightly lower. Local taxes are used to provide services, programs and projects for the betterment of the community. As I begin to prepare the next budget for Winchester, I hope to be able to break out the various costs in milage amounts to demonstrate how the taxes are appropriated. It is critical that residents understand how the tax dollars are spent and then to determine priorities for increasing or decreasing spending. The next several months will be spent informing residents and preparing our next budget. I look forward to working with you. Dale Martin is the town manager of Winchester.

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