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Death and Taxes

Avatar_GregHertel Suppose that I said that I had a new County tax scheme that would increase taxes to middle class and working families. Also suppose that my program would achieve this by benefiting large landholders and trusts. As a final incentive to get you to adopt this tax scheme, it would drive up the cost of housing at the 'affordable' end of the spectrum and make large estates less costly. Would you support this plan? Does it sound like a good idea? A fair deal?

Guess what, you already have this plan! In a classic example of the law of unintended consequences, the county's open space plans have achieved all of the goals I've outlined in the first paragraph. If you own land in San Juan County and it is not part of one of the various Open Space programs, your taxes are significantly higher than they would be if those programs did not exist. I'll use my own land as an example and then compare it to some other properties on San Juan Island. You decide if you think our current tax system is equitable.

First, to put this in context, I moved to the island in 1974 as a schoolteacher. In 1976, I sold a small house in the Portland area and used the $1000 profit to make a down payment on 5 acres in the Wold Rd. area. The land was unimproved and we rented closer to town until 1987 when with my Dad's help and hiring some parts of the construction I built a 3 bedroom house under the County's owner/builder permit. The house is ~1700 sq. ft. It's not fancy but it's home. Over the years, the value of the house has appreciated and last years statement from the County tells me that the house was assessed at $333,710 and my 5.05 acres of land was valued at $179,280. I will pay about $2866 in taxes on this. Now let's compare my house and land to some parcels that are in the various reduced tax categories.

Near the airport there is a 93-acre parcel that is in the Timber category. It has a small building valued at $74,090 while the land is assessed at $24,440! Taxes are around $600 per year. Another 68 acre parcel nearby has no buildings and its value is set at $4550. Taxes will be about $28 per year! These are huge savings over what a parcel assessed at fair market rates would pay. The rest of us make up the difference in higher taxes.

A 31-acre waterfront parcel owned by county council member's family trust is assessed at $125,270, a fraction of its market value. In one of the largest transfers in the county, the owners of Spieden Island save $90,000 every year in property taxes. The rest of us make up that money. None of this affects the county's budget. There is no loss here because the money saved by one land owner is paid by all the rest. Unless your land is in one of the various reduced categories, your taxes are higher to make up for all the land that is reduced.

It's with the best of intentions that all of this is done. The Agriculture classification is meant to give farmers a break though there are fewer farmers in the County than land parcels in this category. The Timber category is meant to allow for the long periods between harvests. The Open Space is meant to preserve the rural feel of the land that we all love.

Unfortunately, all of this comes with a price and the end result is a higher tax on smaller, less scenic parcels. Now the county council is considering yet another category to give a break to land that might be used for agriculture. The net effect of this will be to drive the rest of our taxes up even higher.

I would like to suggest instead that they revisit the whole structure that we've gradually slipped into. In these times, we don't need higher taxes and even more unaffordable housing. I would be happy to see the whole program simply go away. Tax every one equally at the same rate.

Some properties may have to be sold but I don't think that we'll see wholesale development as a result. The density categories already exist to prevent that. I don't expect that Spieden Island will suddenly be sub-divided into ranks of tract housing nor do I expect to see the San Juan Valley Mall spring up. It would require adjustment in some family's budgets and maybe it should be phased in gradually. But it should be talked about, revisited to see if the code is giving us what we want.

The public benefit that is supposed to accompany the tax breaks seems limited and difficult to determine on a parcel-by-parcel case. Public access is very limited and obscure sometimes only allowing a very limited number of groups access on a couple of dates a year. Meanwhile, there have been several levies passed recently that we've been asked to support and while I've supported my share, after examining the current County tax structure and it's inherent unfairness, it will be hard for me to vote "yes" at any time in the future. The middle-class and workers of the county have been shouldering more than their fair share for too many years. It's time to change the way taxes are assessed!

--Greg Hertel
(former freeholder and current Commissioner for the Port of Friday Harbor)

 

Last modified onThursday, 22 September 2011 12:36

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