Do renters pay property taxes?

(I’m writing this to save off for later use; I’m currently entangled in a contentious thread on NextDoor which is likely to circle back to “you don’t pay property taxes on your two rental properties; the renters do!”).

I just wrote (well, my wife did) three big checks to Travis County Tax Appraiser’s office for property taxes for the year. One for the home we live in and two for the past two homes we lived in that we now rent out.

One of our two rental properties was vacant for 1/3 of the year this year (poorly timed lease renewal that didn’t renew).

Did we get a 1/3 discount on our property taxes because there was no renter during those 4 months? No. Well, you say, you had a tenant for 8 months so the renters still paid your property taxes, so there!

OK, leave that one alone for a minute. I’ve got an even better thought experiment.

My father-in-law is a difficult customer for contractors so ended up being his own GC, basically, for renovations of a condo unit they rent out. This unit was empty, without any tenants and obviously without any income, for several years. Yes, you heard me. Yes, we talked about it on numerous occasions.

Was he exempt from having to pay property taxes for those years? Of course not.

This thought experiment is all you should need to immediately discard the glib answer that “renters pay property taxes”. They don’t. And don’t lecture me about tax incidence; that whole discussion can be short-circuited by repeating the examples above. 100% of the tax in the second case was paid by the landlord-without-renters.

The right framing is this: Being a landlord is running a business. Property taxes are an expense that you have to account for with all your other expenses. It does not get ‘passed through to renters’; because, in general, rent is set by what the market will bear. (Past thought experiments that have failed to convince stupid people have pointed out that I raised rent in years my property tax went down and vice-versa). We don’t talk about how hamburger customers pay McDonald’s property taxes. (Some people might, but they’re stupid). We say McDonald’s needs to make enough income to cover their expenses, of which property taxes is a small part. And yes, you can talk about tax incidence in a theoretical sense, but it absolutely does not mean that if the figures tell you that the tax incidence is 80% on renters, that you can predict that a 10% rise in property taxes will mean your rent next year will go up 8%. It simply doesn’t work that way. In the long-run, those taxes will eventually be reflected in rent. But that’s not how people usually are thinking about property taxes; they’re actually believing “if you raise property taxes on my landlord by $1000, my rent will go up by $1000/year”; they vote based on that mistaken understanding; so it’s actively harmful to continue to support that framing.

Cap Metro Fare ‘Increase’ Proposal

There’s rumblings afoot that Cap Metro is considering an across-the-board fare increase, which is stupid and sucks. Here’s a better idea, combined from two tweets I just made, but you might not see, because I’m private at the time I wrote this1.

My proposal for a fare ‘increase’ for Cap Metro is this:

  • Charge for parking at park-and-rides; $5/day to start with. Adjust up if not enough to ensure 10% of spots empty.
  • Monthly passes for discounted parking available only with proof of service area residency.
  • Offer discounted RIDE passes only to people who can prove residency in the service area (hence pay taxes to agency).
  • Charge Dan Keshet and Julio Gonzalez-Altamirano double, because they both suck.2.

If you want more writing like this, you should do something about AURA. It’s not worth the investment for me to write more of this kind of content when they control the air supply and have decided to prevent me from being heard by policy-makers. If you work with them, you are complicit.


  1. if you’re not following me, ask nicely; and if you’re friendly with AURA, the answer is no 

  2. Dan because he stole my “activist flypaper” term-coinery and won’t attribute it; Julio because he carried water for Cap Metro’s gutting of local 1 and 3 service and helped them claim they needed better land use to justify frequency there 

On Proposition A

Dealing with a work fire but this comment from Austin’s only good urbanist group deserved something more visible/accessible….


The housing bond is dumb when it doesn’t focus primarily on new supply.

In a city with 10 houses and 15 people that need houses, we start with 10 people in houses and 5 people homeless; and the 10 people with houses are the ones that had more money than the 5 homeless people.

Taking 2 of the houses off the market and reserving them for the 2 poorest people just makes people 6 and 7 suddenly homeless. It doesn’t house any new people; it actually spends money and we still end up with 10 people in houses and 5 people homeless. We are actually worse off overall, not better, and the people the most worse off are the poorest people who were able to afford housing before.

New supply doesn’t mean “build income-restricted apartments on a tract that was already zoned MF that the market would have gotten to soon anyways”. It doesn’t mean “take an existing apartment complex that has low rents and is in danger of being redeveloped off the market”. Neither one of those actually adds supply.

When the mayor cravenly surrendered on CodeNEXT, he made it even more clear that Proposition A would arguably make things worse. If your goal is to increase a regressive tax to pay to take the poorest N people currently served by the market and replace them with a different N of poorer people, then Proposition A is worth your support.

Know how you can tell they’re not honest?

Capital Metro edition

Yes, it’s been a while1.

In a recent twitter thread, Karl-Thomas Musselman posted the tweet below. I am making this blog post to capture it so that this well-made point is not lost in the twitter memory hole.

The graphic comes from Capital Metro’s 2016 approved budget on page 48. The full graphic is after this paragraph. What do you think this kind of choice in axis scaling suggests about Capital Metro’s honesty on rail subsidies?

Page 48, Capital Metro 2016 Approved Budget
Page 48, Capital Metro 2016 Approved Budget


  1. Note: I have not blogged much this year because the actions of Julio Gonzalez-Altamirano and others, especially linked with AURA, have made my investment in public affairs significantly less effective. This lack of content is likely to continue as long as the urbanist community decides his approach and style are preferable.  

Red Line weekend debate, in pictures

WHEREAS most riders of existing Red Line service are likely not residents of the City of Austin and the majority likely don’t even reside in jurisdictions which pay Capital Metro taxes

and

WHEREAS the City of Austin already excessively subsidizes the existing Red Line operations, this as the overwhelming taxpayer to Capital Metro, contributing over 90% of Capital Metro’s revenue to allow the Red Line to be subsidized at a cost of nearly 34 dollars per ride

and

WHEREAS such funds as proposed to further subsidize the Red Line cannot possibly result in a positive economic outcome for the City of Austin given that weekend traffic on the highways is not substantial, and the city can only recover 1% of spending by visitors in the form of sales taxes

THEREFORE BE IT SUGGESTED that everybody reading this contact everyone you know and your city council members and advise AGAINST the City of Austin paying for expanded weekend service on the Red Line and saving the money, instead, for the city’s urban rail proposal – which, unlike the Red Line, will serve primarily Austinites and which desperately needs the money.
Here’s what I just sent.

Honorable mayor and council members:

Please reject efforts by some to use additional tax revenue from the city of Austin to subsidize service on Capital Metro’s Red Line. As a strong supporter of rail transit in general but also an Austin taxpayer, surgeon I don’t want to spend our scarce local transportation dollars on a service which primarily benefits non-Austin residents, thumb and definitely not at such a high cost.

The most recent operating subsidy information available from Capital Metro shows weekday service requiring an operating subsidy per ride of approximately 34 dollars. This is abominably high compared to good rail lines in other cities – and ten times the current bus subsidy across the system. But this subsidy, at least, is paid for by all Capital Metro members (including Leander residents, for instance). Not so the case with this new proposal.

Even if we exceed weekday numbers by perhaps double, my own quick estimates show we would likely be spending around 20 city tax dollars per rider to bring them downtown and take them back – and a reasonable expectation is that they might spend 40 or 50 dollars while here – meaning the city is asking taxpayers to spend 20 bucks to return 40 or 50 cents to the tax coffers (and this is assuming they wouldn’t have driven and paid to park were the Red Line not an option).

This money needs to be saved for the city’s own urban rail plans.

Regards,
Mike Dahmus
UTC 2000-2005
mike@dahmus.org

Since sending this I realized I should also have included a point I made on the phone to KUT an hour or so ago: that during the week, you can make an argument for (some) subsidy by referring to scarce space on highways and roadways and in parking lots and garages. This is not the case on the weekend – plenty of space to get into downtown, and plenty of places to park, some of which even make the city additional revenue.

Here’s what I just sent.

Honorable mayor and council members:

Please reject efforts by some to use additional tax revenue from the city of Austin to subsidize service on Capital Metro’s Red Line. As a strong supporter of rail transit in general but also an Austin taxpayer, melanoma I don’t want to spend our scarce local transportation dollars on a service which primarily benefits non-Austin residents, about it and definitely not at such a high cost.

The most recent operating subsidy information available from Capital Metro shows weekday service requiring an operating subsidy per ride of approximately 34 dollars. This is abominably high compared to good rail lines in other cities – and ten times the current bus subsidy across the system. But this subsidy, ophthalmologist at least, is paid for by all Capital Metro members (including Leander residents, for instance). Not so the case with this new proposal.

Even if we exceed weekday numbers by perhaps double, my own quick estimates show we would likely be spending around 20 city tax dollars per rider to bring them downtown and take them back – and a reasonable expectation is that they might spend 40 or 50 dollars while here – meaning the city is asking taxpayers to spend 20 bucks to return 40 or 50 cents to the tax coffers (and this is assuming they wouldn’t have driven and paid to park were the Red Line not an option).

This money needs to be saved for the city’s own urban rail plans.

Regards,
Mike Dahmus
UTC 2000-2005
mike@dahmus.org

Since sending this I realized I should also have included a point I made on the phone to KUT an hour or so ago: that during the week, you can make an argument for (some) subsidy by referring to scarce space on highways and roadways and in parking lots and garages. This is not the case on the weekend – plenty of space to get into downtown, and plenty of places to park, some of which even make the city additional revenue.

The city wants to spend this much:

per rider bringing people from OUTSIDE the

to come into town in the hopes that they’ll spend

of which the city gets back 1%, ampoule or this much:

Let’s repeat. Spend this much:

to get this much:

Here is how this all made me feel:

Write the City Council on Red Line weekend subsidy

WHEREAS most riders of existing Red Line service are likely not residents of the City of Austin and the majority likely don’t even reside in jurisdictions which pay Capital Metro taxes

and

WHEREAS the City of Austin already excessively subsidizes the existing Red Line operations, this as the overwhelming taxpayer to Capital Metro, contributing over 90% of Capital Metro’s revenue to allow the Red Line to be subsidized at a cost of nearly 34 dollars per ride

and

WHEREAS such funds as proposed to further subsidize the Red Line cannot possibly result in a positive economic outcome for the City of Austin given that weekend traffic on the highways is not substantial, and the city can only recover 1% of spending by visitors in the form of sales taxes

THEREFORE BE IT SUGGESTED that everybody reading this contact everyone you know and your city council members and advise AGAINST the City of Austin paying for expanded weekend service on the Red Line and saving the money, instead, for the city’s urban rail proposal – which, unlike the Red Line, will serve primarily Austinites and which desperately needs the money.
Here’s what I just sent.

Honorable mayor and council members:

Please reject efforts by some to use additional tax revenue from the city of Austin to subsidize service on Capital Metro’s Red Line. As a strong supporter of rail transit in general but also an Austin taxpayer, surgeon I don’t want to spend our scarce local transportation dollars on a service which primarily benefits non-Austin residents, thumb and definitely not at such a high cost.

The most recent operating subsidy information available from Capital Metro shows weekday service requiring an operating subsidy per ride of approximately 34 dollars. This is abominably high compared to good rail lines in other cities – and ten times the current bus subsidy across the system. But this subsidy, at least, is paid for by all Capital Metro members (including Leander residents, for instance). Not so the case with this new proposal.

Even if we exceed weekday numbers by perhaps double, my own quick estimates show we would likely be spending around 20 city tax dollars per rider to bring them downtown and take them back – and a reasonable expectation is that they might spend 40 or 50 dollars while here – meaning the city is asking taxpayers to spend 20 bucks to return 40 or 50 cents to the tax coffers (and this is assuming they wouldn’t have driven and paid to park were the Red Line not an option).

This money needs to be saved for the city’s own urban rail plans.

Regards,
Mike Dahmus
UTC 2000-2005
mike@dahmus.org

Since sending this I realized I should also have included a point I made on the phone to KUT an hour or so ago: that during the week, you can make an argument for (some) subsidy by referring to scarce space on highways and roadways and in parking lots and garages. This is not the case on the weekend – plenty of space to get into downtown, and plenty of places to park, some of which even make the city additional revenue.

Who is riding the Red Line, Part Two

Here’s a summary chart showing the data from Capital Metro from October 2011; showing how many people board from each station in the AM peak, discussed yesterday in more detail.

Why break it up like this? Because as I mentioned yesterday, it should be pretty obvious that the 3 park-and-rides aren’t attracting a bunch of people from Austin itself. Nonsense, you say? Lakeline is in the city limits, you say? Let’s look at the map.

Here’s Lakeline Station.

Here’s Lakeline Station after I roughly draw the line representing the Austin city limits (by hand, so please excuse my poor skills). Map updated on 2/9/2012 to include a small section I inadvertently left out in my first poor attempt at freehand.

And here is the same image with an arrow helpfully representing the approximate direction all those transit passengers are going to work (note: Paint won’t let me go off straight vertical or horizontal; imagine it about 15 degrees to the southeast).


Now, here’s the thing: There are a few people inside that little part of Austin sticking up there who might be taking the Red Line. But it ought to be incredibly obvious based on nothing more than this picture (if it wasn’t just from words before) that most of the passengers getting on the train at Lakeline probably came from outside the city limits of Austin – because most people living inside the city limits of Austin would have to backtrack quite a ways to get to the train station.

Howard is the same – except it’s people from Pflugerville and Round Rock freeloading instead of Cedar Park. Any questions?

Who is riding the Red Line?

Well, we don’t know who, but we do know how many are getting on at each station. Thanks to Erica McKewen at Capital Metro for quickly supplying the following information (excerpted from a longer spreadsheet).

Morning boardings, AM peak:

Leander 154
Lakeline 211
Howard 154
Kramer 47
Crestview 26
Highland 12
MLK 8
Saltillo 3

Data from October 2011.

Analysis:

The stations where almost every passenger likely comes from the city of Austin are Kramer on down. Those stations account for (47+26+12+8+3 =) 97 boardings each morning.

The station where perhaps half the passengers come from the city of Leander (pays Cap Metro taxes, but not COA taxes – this is an important distinction for later in this post) accounts for 154 boardings each morning. So say 77 passengers here do not pay Capital Metro taxes.

The stations where most passengers likely come from places that are not the city of Austin and do not pay Capital Metro taxes are Lakeline and Howard, which account for (211+154 =) 365 boardings each morning. Say 10% of these boardings come from the city of Austin, and another 10% from other jursidictions that pay Cap Metro taxes (Leander, part of unincorporated county). This means 37 people from Austin, and 37 more that also pay Cap Metro taxes. If correct, 291 people that boarded here do not pay Cap Metro taxes.

(More on that last paragraph in another later post – suffice to say that rail stations on the edge of city limits are not going to attract most of their passengers from within that city as those people would be backtracking to board the train).

Combine those and you get a reasonable estimate that of the 615 AM peak boardings in October in this sample, about 368 are from places that do not pay any Capital Metro taxes and about 134 are from the city of Austin.

Put another way, 60% of the riders of MetroRail do not pay any taxes to support MetroRail, and 78% of the riders of MetroRail are from outside the city of Austin. If we assume the weekend ridership will be roughly the same as the in-week ridership (and this is a big assumption), these numbers would hold there too. More on that as details become more clear, but I think that even if the line terminates at Lakeline, the numbers would stay roughly the same, since some of the Leander riders would still ride, and far fewer of the people getting on in-town will (since weekend connecting bus service is far less likely).

In other words, if the city does what it is rumored to be doing and decides to pay for weekend MetroRail service, they’ll be paying 20 bucks a ride (collected from Austin taxpayers) to carry mostly non-Austinites downtown in the hopes of collecting a quarter (25 cents) or so of sales tax from each of them (that sales tax only being ‘extra’ if those people wouldn’t have driven downtown anyways – to say nothing of lost parking revenue if they would have paid to park).

Other posts in this series:

Quick note on the city’s proposal to subsidize Red Line weekend service

In today’s Letters, syphilis valeologist allowed to be published uncritically and without challenge:

Bicycle lanes are dangerous on Austin roads for both drivers and bikers. Burleson Road is a classic example of where the car lanes were narrowed to accommodate bikers. Bikers should have to purchase an annual permit that has toll tag technology.

Since they pay no gas tax, this site medstore this fee should pay for their road use. These tags should be able to be read by police to identify if their tag is current, and they could also identify the bikers, should they be involved in an accident.

Anne Clark

Lockhart

My response on the way to them via various intertubes:

Anne Clark, in her letter on 10/27/2011, is woefully misinformed. Most roads in our area, even most major arterials, receive no funding from the gasoline tax, as the state prohibits its portion of the gas tax from being used outside the state highway system, and most federal gas taxes are similarly directed only to roads with a route shield on them. In fact, since some local (general) funds are also used for state and federal highways, it is likely cyclists who are subsidizing motorists in Austin, not the other way around.

Regards,

Mike Dahmus

City of Austin Urban Transportation Commission 2000-2005

Things are going crazy at my day jorb. So this might be all I get to post. This is a comment I just left on the Statesman article:

Almost nobody inside the city limits of Austin has a reason to use this thing on the weekends – because the stations with parking primarly serve those outside city limits, sale and the stations without parking aren’t pedestrian-friendly (and buses that might connect to them don’t run much on the weekends).

Combine this with the fact that we’d be giving up the $5-$10 the person from the non-Austin jurisdiction would otherwise pay to park their car downtown and this is a truly STUPID move for the city of Austin to even contemplate.

This is something the cities of Leander and Cedar Park and Round Rock and Pfluygerville should be subsidizing, illness not Austin.

Update from a few months later:

Who is riding the Red Line?

and

How much are we subsidizing passengers on the Red Line?

Statesman At It Again

In today’s Letters, sildenafil allowed to be published uncritically and without challenge:

Bicycle lanes are dangerous on Austin roads for both drivers and bikers. Burleson Road is a classic example of where the car lanes were narrowed to accommodate bikers. Bikers should have to purchase an annual permit that has toll tag technology.

Since they pay no gas tax, this fee should pay for their road use. These tags should be able to be read by police to identify if their tag is current, and they could also identify the bikers, should they be involved in an accident.

Anne Clark

Lockhart

My response on the way to them via various intertubes:

Anne Clark, in her letter on 10/27/2011, is woefully misinformed. Most roads in our area, even most major arterials, receive no funding from the gasoline tax, as the state prohibits its portion of the gas tax from being used outside the state highway system, and most federal gas taxes are similarly directed only to roads with a route shield on them. In fact, since some local (general) funds are also used for state and federal highways, it is likely cyclists who are subsidizing motorists in Austin, not the other way around.

Regards,

Mike Dahmus

City of Austin Urban Transportation Commission 2000-2005