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Tuesday, March 07, 2006

Homeowners' Tax Burden Highest in Philadelphia Area

Home Real Estate News
Author:

Publishing date: 03/06/06

RISMEDIA, March 7 — According to a 2005 Runzheimer analysis, people working in the Philadelphia area will experience the most prevalent tax burden. As an example, a family of four with an annual income of $75,000 can expect to bequeath an average of $19,992, or 26.7% of total income, annually toward taxes after all personal exemptions and allowable deductions have been considered.

Other high tax areas include Cleveland, where the average suburban family pays $19,579 in taxes, or 26.1% of income; New York with a tax burden of $18,798, or 25.1%; and Chicago at $18,787, or 25%. In contrast, areas that had the least tax burden include Honolulu, Hawaii, with a tax liability of $11,973, or 16%; Casper, Wyoming, with $13,023, or 17.4%; and Anchorage, Alaska with $13,454, or 17.9%. The lack of state income tax for both Wyoming and Alaska contribute to the fact that these states remain less affected by tax burdens. A cross correlation with a parallel study done in 2000 by Runzheimer International indicates that there may be hope on the horizon for those who prefer keep their hard earned dollars in their pockets, as opposed to forwarding that money on to Uncle Sam. On average, the percentage of tax dollars has decreased by almost 1% among the selected cities in this study between 2000 and 2005. The cities that were impacted the most in those five years were Honolulu, HI, with a decrease of 5.2%, and Providence RI, with a decrease of 3.3% in total income being diverted to taxes. In the above table, tax liability has been determined for the homeowner. Areas researched are suburban communities surrounding each of the metropolitan areas where families earning $75,000 annual income reside. A 2,500 square foot home with approximately 4 bedrooms, 2.5 bathrooms, and 8 total rooms is used in all locations. Mortgage costs are based on a 20% down payment and 6.25% interest for 30 years. Real Estate Tax: Each community’s real estate taxing formula, based on rate of assessment and percent of market value subject to assessment, has been applied to a 2,500 square foot, 4 bedroom, 2.5 bath home in the selected cities listed above. Sales Tax: Based upon the same volume of identical goods & services purchased annually by a $75,000 family of four. The cost of these goods & services will vary by location. Both state and local sales taxes have been calculated. Federal Tax: Federal tax is based upon the most current tax formulas. A passive income and miscellaneous deduction amount are used in our calculation. Passive income is from savings interest, dividends, capital gains, etc. The amount for our example is $4,928. The miscellaneous amount for deductions is for charitable contributions and financing expenses. The amount is $1,555. Other deductions are for the mortgage interest, real estate taxes, state and local tax and ad valorem taxes allowed under current federal law. Taxes were calculated twice. First, using itemized deductions and second, using standard deductions. The results are the calculations with the most favorable liability to the taxpayer. RISMedia welcomes your questions and comments.



For more information on Chautauqua Lake Real Estate & Living visit: www.chautauqualakehomes.com

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