How the Poor (Even Renters) Get Screwed by Property Taxes
You might think that if you rent you don’t pay property taxes. In fact, you not only pay them, but as a renter you probably pay at a much higher rate than most homeowners. Yes, renters, including those who are too poor to buy a home, get screwed by property taxes.
To explain, I’ll start with two simple economic facts:
- All costs that go into providing products or services must be paid by the consumers of those products or services before the first dollar of profit is made.
- Houses, condos, and apartments owned by landlords are often taxed at higher rates than those occupied by homeowners, and that extra cost, like all costs, must be passed on to the tenants.
To understand the first point, think about buying a cookie. The price you pay must cover the cost of the flour, the sugar, and every other ingredient, right? In fact, every cost has to be covered before there is a penny of profit — and cookie makers don’t do what they do to lose money.
So consumers pay for every expense the cookie maker has (otherwise he goes bankrupt). More than that, if he makes only a few cents per cookie, and the cost of the flour rises by a few cents per cookie, he has to raise the price so you can keep paying all of his costs (otherwise he goes bankrupt).
