Why High Taxes?

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Did You Know?
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The assessed value of your property bears little or no relationship to the fair market value of your property.

Contents

Property is generally assessed at lower than fair market value. The question is, are you being assessed equally and fairly in relation to other similarly situated constituents in your taxing jurisdiction? Are in fact being taxed fairly in relation to others in your jurisdiction?

The property tax system in the United States stands reason on its ear. Instead of a system that would start with individual valuations, total all such valuations and arrive at a net value that would provide the revenue available for expenditures, the property tax system works in reverse.

In fact, the taxing authority determines its budget for its fiscal year first. It totals up the monies “needed” to fund its services as well as principal and interest payments owed for bonded indebtedness. Many bond funds include portfolios of municipal bonds. These bonds generate interest for the fund. The interest comes from funds generated by the indebted municipalities. In other words, your tax dollars go towards funding the interest payments.

Once the desired budget is formulated and approved, and after deducting non-tax revenue streams (grants and the like) an amount of money is derived which is the amount of property tax revenue needed to fund the budget.

The property tax assessor then takes the ball and runs with it. His job is to identify and assess each piece of property in his district and arrive at a value.

Mathematical Alchemy

Alchemy.gifThe tax rate is computed by dividing the budget by the total value of property in the district


The formula looks like this:

Tax Rate = Dollars needed (also known as the budget) ÷ Dollars from which to draw (total assessment value)

The number result is your tax rate, which can be expressed in several ways:

  • Dollars Per Hundred [ eight dollars per hundred…or .08]
  • Mill Rate [80 mills equals $80 per thousand of value]

Tax dollars due are just computed by multiplying your individual assessment times the tax rate. This equals your tax due.

This property tax, or ad valorem tax is a clumsy, inefficient and regressive tax system that is inherently unfair. The tax assessed bears no relationship to your income stream, your purchasing choices or your ability to pay. Governments are free to bloat their budgets and, include pork,
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perks and pet projects unchecked. Therefore, it is excessive and distorted government spending that causes the need for increased revenues and hence higher taxes. Examples of such porcine spending include slipshod payroll accounting that allowed deceased citizens to continue receiving government payouts, high priced parties that include ice sculptures, monies to permit officials to purchase $1,000 figurines, martini bars, extravagant meals and vacations and time shares. Often times monies sought go to “pet projects" dominated by partisan politics.

The authority for property tax is conferred through state statute. Revenues generated should fund county or municipal services such as police, fire, transit, facilities and some schools.

The assessed value of your property bears little or no relationship to the fair market value of your property.

Trends

The last twenty five years have seen tax assessments that exceed population and inflation growth by 55% or 2% per year. Property taxes have risen on average, $630 per household nation wide. Some states have been hit harder than others. For example in Massachusetts, property taxes went up 35% over the past three years.

Most taxpayers never consider appealing their property tax assessment. It is true that most of the factors that contribute to computing your tax bill are fixed and not subject to appeal, e.g., the budget is fixed at the government level, the tax role is set by the assessor and the tax rate is determined at the government level. But, you can appeal your individual property assessment. As stated above the question is, have you been assessed fairly in relation to the other citizens in your jurisdiction?





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