Cost of Ownership
Where Does a Homeowner’s Money Go?
It’s always a good idea to know how your client is spending their money; what are their fixed costs, cost of maintenance, housing, taxes, insurance, and the works. Lately there have been several studies about where a homeowner’s money actually goes, and the results are interesting.
Seattle, Washington, was ranked the number one city in the country for the highest average annual cost to maintain a home. Seattle was followed by several other Western cities in the top ten including: Spokane, Washington; Honolulu, Hawai’i; Salt Lake City, Utah; and Denver, Colorado. These average maintenance costs included everything from appliance installation and repair to the plumbers charge for fixing a water faucet. Roof repair and replacement was not included in the findings.
A similar survey ranked the states where home ownership will cost you an arm and a leg. In this survey, the expenses taken into account were; cost of the home, interest rates, insurance, and property taxes. It’s not really surprising that Hawai’i was listed as the most expensive state in the United States to live. However, other Western states were not far behind: California, Washington, Colorado, Oregon, and Utah.
That brings us to state taxes. The award for the highest top tier of personal income tax rate in the country goes to California with 13.3%, followed by Hawai’i with 11%. There are currently eight states that impose no personal income tax; Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming. That’s not to say that these states don’t collect taxes from their residents. What they don’t collect on personal income, they usually make up for in other areas, and from what I hear, Washington is particularly adept in this field.
Fees that the states levy include taxes on everything from gas, property, vehicle registration, excise taxes, sales tax, utilities, and licensing fees. Many of these taxes are compounded when the county and city added their own additional fees.
Some cities are getting creative. For example, Malibu, California, recently introduced a separate tax when you order an item online and it’s shipped to a Malibu address. The city states that this fee was put in place to protect local merchants from mega online shopping sites like Amazon. Whether or not these additional taxes collected from the Malibu residents’ internet shopping is meant as a punitive incentive to shop locally, a cash grab, or if the money amassed will eventually makes its way back to the local merchants remains to be seen.
Additionally, residents could end up paying fees indirectly because of the taxes imposed on businesses. For instance, Nevada does not tax business income, but instead they levy a fee based on the number of employees of each business. These fees are obviously then passed on to the consumer.
So that begs the question; how much of the average person’s income goes to the state? New York came out on top with 12%. This was followed by Hawai’i with 11.8%. Other notable entries in the Western states were; California with 10.4%, Utah with 9.4%, and Colorado and Oregon tied at 8.4%. Remember that state, city, and county taxes are in addition to the federal taxes that are already imposed on everyone.
Oh yeah, what about those eight states with no personal income tax? Well, residents of those states still end up paying taxes to the state in some form. On the average, those people pay; Alaska 4.9%, Florida 6.1%, Nevada 7.4%, South Dakota 6.4%, Tennessee 6.1%, Texas 7.6%, Washington 8.0%, and Wyoming 5.7%.
So, no matter what, you’ll end up paying taxes to local, state, and federal agencies somewhere down the road, and rightly so. Police and fire departments, schools, emergency services, maintenance, infrastructure, and our quality of life all depend on funding from taxes. As Benjamin Franklin stated, “In this world, nothing can be said to be certain, except death and taxes.”
Marc Dodson
Editor
