In preparation for the budget discussions, I thought I’d take a look at the local property tax rates.  The Massachusetts Department of Revenue keeps an online historical record of the rates for every municipality in the state.  It took a little massaging in Excel, but here is a list of property tax rates from 2003-2009.

Below is a graph of the tax rates for my local area.  Property taxes are in mils.  For each mil, one dollar tax is assessed for every dollar in property valuation (the value of the land and the buildings).

North Reading is in the middle of the pack — not the highest nor the lowest.  Note that three of the towns, North Reading, North Andover, and Middleton all had declining tax rates for the period 2003-2007, followed by increases in 2008 and 2009.   During 2003-2007, North Reading (and the nation) experienced increasing property values  (See graph below)*.  Since valuation rates were increasing, tax mil rates could decrease, leaving homeowners with constant tax bills and towns with steady budget levels (See second graph below).  This graph also shows that despite recent increases in the tax rate, the average North Reading homeowner is paying less property tax now, than in 2005.

Having compiled and reviewed the data, I now feel better prepared for tomorrow night’s town meeting.  I now know that:

• my town has a fairly average tax rate for the area,
• our property tax rates are directly correlated (anti-correlated) with property valuations, and
• I can ignore townfolk who complain about “skyrocketing” tax bills.

If you’re not from North Reading (and only 13,000 people in this world aren’t), you might want to consider your own town’s taxes and budget.  Tax rates are a strong influence on real estate values.  People want to buy where towns are well governed.  And part of good governance is budgetary self-restraint.

* Average property values are from Zillow.com.

The wage increase won’t affect Massachusetts residents, as our state has a minimum hourly wage of $8.00.

Everyone, even those making minimum wage, will be affected by the increase in Massachusetts sales tax from 5.00% to 6.25% as of August 1st.  Sales tax affects lower income folks disproportionately, as they spend a greater percentage of their income on necessities.  Food is exempt from the tax, but other essentials such as toothbrushes, laundry detergent, and car parts are not.  If we have to raise taxes on the general population, I’d rather see an increase in the income tax.  Of course I’m amazed that a (normally) progressive state such as Massachusetts has a flat income tax.  The guy making minimum wage is paying the same rate as the hedge fund billionaire.  Except, of course, the billionaire can afford lawyers to find tax loopholes.

I guess taxes really are just for the little people.

Yeah, me too.

Yet every time I think I’m finished, another issue pops up and nags at me to investigate.

Today’s Quixotic quest was in search of the correct carryover capital losses.

After last year’s market bloodbath, I, and I imagine you, too, have some capital losses (i.e. negative capital gains).  Good news:  they reduce the tax you owe.  Bad news: you can only claim $3000 in losses this year; if you have more, you must carry them over to next year.

The problem is that the carryover amounts are different for myself and my partner on our Federal-filing-single forms than on our Massachusetts-filing-jointly-as-married forms, because some of my losses offset her gains when we file jointly.  When TurboTax imports my form as a starting point for the Pro-Forma Federal married form, it carries in the wrong carryover amounts.

Therefore: I recommend strongly that you record your carryovers on paper (I know that sounds like a Luddite) to make your filing easier next year.  Feel free to use the following format, if you find it useful.

The Federal forms for Pat and Alex individually should be correct.  You can record the values from TurboTax’s Federal Carryover Worksheet.  The values for the Massachusetts state return come from the Commonwealth’s Schedule D, line 22 for long-term loss carryovers and Schedule B, lines 23 or 40 for short-term loss carryovers.  Next year, override the values on the Massachusetts’ Schedules B and D form for 2008 caryovers.

Original post on TurboTax complaints:  Three things I hate about TurboTax

Hey, that’s some good!

Let me know if this was a new deduction for you.