Taxes Not Factored in Forbes Study
One factor Forbes Magazine apparently did not give much weight to in ranking the Buffalo-Niagara Falls Metro area as the "Most Affordable," is taxes.
Consequently, Buffalo/Niagara Falls may not be as “affordable” as its ranking suggests.
The average New York State resident pays 4.45 percent of every dollar he or she makes in state income taxes, according to CNN Money. This makes New York, at least in terms of income taxes, the least affordable state in the nation.
Residents pay no income taxes in Alaska, Florida, Nevada, Texas, Washington or Wyoming, yet none of these state’s cities made Forbes’ top 10 most affordable list.
New York State has the 7th highest sales taxes in the U. S. The sales tax is 8.75 percent in Erie County and 8 percent in Niagara County. Alaska, Delaware, Montana, New Hampshire, and Oregon have no state sales taxes, yet none these states have cities on Forbes’ top 10 most affordable list.
An annual comprehensive study of the over 3,000 counties with populations exceeding 60,000 conducted by the Tax Foundation of Washington, D.C., consistently ranks Niagara and Erie Counties' local real estate tax rates as among the highest in the nation. Niagara County generally ranks #1 or #2, as the highest taxed county in America.
Actually, one could make the argument that it is more affordable to live in Florida than in the Buffalo-Niagara region.
A $120,000 home in Amherst or Niagara Falls might be taxed at $6,000 a year. The monthly payment on a $100,000 mortgage at 3 percent for 30 years would be $942 for principle, interest and taxes on this home. A comparable, $200,000 home in Florida might be taxed at only $2,500. The monthly payment on that home (with $2,500 in taxes) on a $172,500 mortgage would be the same as the $100,000 mortgage in Buffalo: $942.
While Floridians pay between 6 and 7.5 percent sales tax, the sales tax is 8.75 percent in Erie County and 8 percent in Niagara County.
Florida has no state income tax. If a person makes $100,000 per year, he would save $4,500 in state income taxes if he lives in Florida. Between sales taxes and income taxes, that's a savings of about $5,000 per year.
One could buy a $275,000 house in Florida and, with the lower property taxes, sales taxes and income taxes, pay the same (counting taxes and mortgage) as someone living in a $100,000 home in Buffalo.
But that's not all. New Yorkers also pay significantly more for utilities.
As of December, 2013, the average New Yorker pays 17.47 cents per kilowatt hour for electricity, the second highest rate in the U. S., according to Electric Power Monthly.
In Florida, residents pay 11.38 cents per KWH (about 30 percent less than New Yorkers).
Although a Floridian may use more electricity than a New Yorker due to the extra cost of air conditioning during the summer, he or she will save 30 percent on the cost per kilowatt hour and on top of that up to 100 percent on gas/and or electric for heating.
Cheaper electricity, combined with zero or near zero heating costs, is likely to result in utility savings for a homeowner in Florida of as much as $3,000 a year.
Paying approximately $3,500 less in property taxes, $4,500 less in income taxes, $300 less in sales taxes, and $3,000 less for utilities, it costs a person making $100,000 per year about $11,300 less to live in Florida than to live in New York State.
Hence, a typical Floridian can live in a $400,000 house on the water with a swimming pool, while his Buffalo counterpart will pay the same costs to live in a $100,000 home.
Yes, there are reasons why the prices of property are low in Erie and Niagara County - and taxes are a big part of it. In truth, high taxes are why the Buffalo - Niagara Falls area is NOT one of the 10 most affordable places to live.
|Niagara Falls Reporter - Publisher Frank Parlato Jr.||www.niagarafallsreporter.com||
Mar 18, 2014