Tax rates in Philly declining as suburban rates rise
There is a seemingly endless list of things to consider when trying to find the perfect house. Some of these - like price, size, location and amenities - are obvious, while others require a fair amount of thought and specific knowledge. One example of the latter category is the relative property tax rate of a given area. For instance, people thinking of buying one of the homes for sale in Philadelphia, PA, may want to look into the taxes associated with houses in different parts of the region.
According to The Philadelphia Inquirer, property taxes for homes within the city limits are much lower than their suburban counterparts, which has caused the respective tax burdens to come closer together. In fact, since 2000, the average tax burden in the city has declined thanks to relatively low levies and a 14 percent wage tax reduction within the city. During that time, suburban property tax rates have risen just as drastically.
A new study of 236 neighboring towns carried out by the Pew Charitable Trusts has some interesting things to say about this trend. The results show that a hypothetical middle-class family in 2012 paid 12.9 percent of its income in taxes, including wage, real estate and sales taxes. This total, Pew reports, is lower than it was in 2000, when it stood at 13.5 percent.
Conversely, a similar family in the suburbs saw their tax rates increase from 9.8 percent to 12.2 percent during the same period. People thinking of buying a home in the region may want to take note of these converging trends, as it could help them predict their tax burden moving forward.
"Philadelphians are still more heavily taxed than most of their suburban peers," said Thomas Ginsberg of Pew, according to the source. "But the tax gap between the city and the suburbs as a group has shrunk dramatically.
Why are taxes in the city dropping? One major factor is that, between 2000 and 2009, the city has incrementally lowered its wage taxes from 4.6 percent to 3.9 percent. The main difference, though, is the disparity in property taxes.
The differing property tax rates between the city and the suburbs have led to a fairly wide disparity. According to the source, the owner of a $186,000 house in the suburbs would now pay $2,000 more each year than his or her urban counterpart.