Tech Workers’ Pricier Homes Mean They Pay More in Taxes

Tech Workers’ Pricier Homes Mean They Pay More in Taxes

The influence that tech workers’ rich paychecks have on home prices has become such a cliché that satire site The Onion spoofed the phenomenon in the story “Housing Prices Spike As Tech Employee Takes Stroll Through Neighborhood.” With less humor, Bloomberg News reports that even tech firms are relocating to places with lower costs of living.

Most stay put, though, while their workers continue to drive up home values – and as a result, shell out more in real estate taxes than non-tech households.

"Tech workers catch grief for driving up housing prices in some parts of the country. At the same time, they pay quite a bit more in real estate taxes, which helps finance everything from local parks to keeping the streetlights on," said Zillow Chief Economist Svenja Gudell.

Tech households nationwide paid an average of $4,214 in property taxes in 2014, compared to $2,885 for non-tech households, according to a new report from Zillow Research.

The difference is more striking in tech hubs like the Bay Area.

California’s Proposition 13 holds real estate taxes in check for longtime homeowners – for example, Warren Buffet said in 2003 he pays six times more taxes on his home in Omaha than his far more valuable home in Laguna Beach. But newcomers don’t benefit, and neither do workers in other states.

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In the San Jose metro area, tech households paid an average of $8,889 in property taxes, compared with $6,003 for non-tech households. And in the San Francisco area, tech households paid $7,531 on average, while non-tech households paid $5,606.

All those taxes add up. Here’s what tech households’ property taxes would have covered in cities within these metro areas.

  • San Francisco, $593.6 million: That’s enough to cover the budget for the city’s fire department ($325.8 million), sheriff’s office ($185.6 million) and most of its awesome parks and recreation ($83.4 million).
  • San Jose, $468.8 million: That’s how much the city of San Jose is spending on its police budget ($336 million) plus most of its garbage collection and recycling ($142.5 million).
  • Seattle, $329.2 million: Those taxes would pay for a year’s budget at the human services department ($142.2 million), the department of education and early learning ($55 million) and the public library ($71.8 million), with money left over for the area around the Space Needle called Seattle Center ($45.3 million).
  • Austin, $248.7 million: That amount would cover Austin’s airport operating fund ($135.4 million), its health and human services ($85.2 million) and half of its library budget (which totals $42 million).
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The only major metro area where tech households pay less in real estate taxes than non-tech households is Honolulu, where tech households pay $10.6 million — enough to improve the sewers in its Chinatown neighborhood this year.

For a deeper look at U.S. housing data, check out Zillow Research.

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