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December 28th, 2011 MARTY SMITH | Dr. Know
 

Dr. Know: Renter’s Burden

Don’t renters pay property tax (indirectly) through rent?

drknowILLUSTRATION: Hawk Krall

In your column on 911 services [“Dr. Know,” WW, Dec. 14, 2011], you say renters don’t pay property taxes. I’m sure you realize those taxes are passed on to renters in the form of rent. Those services are paid for by everyone, one way or another.

—Melia D.

If you’d been the only person to say this, Melia, I might be tempted to agree with you. But so many folks have taken me to task on this point that I must demur: Anything that so many people are so sure about has got to be wrong.

The column in question said that, since Portland Fire & Rescue is funded by property taxes, renters don’t pay for it directly. 

You’d think that I’d asserted that Chinese Democracy was Guns N’ Roses’ best album. I was soon hip-deep in emails claiming that, since landlords pay property taxes, and renters pay landlords, renters pay property taxes.

But then where do you draw the line? If you eat in a restaurant that pays property taxes, are you paying them? If your landlord is Charlie Sheen, does that mean you’re paying for hookers and blow? And do you really believe your rent would go down if your landlord’s tax bill did?

The truth is that landlords, like all business people, charge what the market will bear. “If business were as simple as just passing along all your costs to the customer, nobody would ever lose money,” says economist Bob Whelan of ECONorthwest. 

Shortly after telling me that I was “100% right” (I love this guy), Whelan explained the concept of “tax incidence,” which is where economists try to calculate how the actual burden of a tax is spread around. It’s a complex business, and seldom as simple as you (or, to be honest, I) make it sound.

 
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