In some respects the property tax is the best tax. When a town sets a budget it knows exactly how much it will need from the citizens (the tax levy) and no other tax method can produce a specified amount as this can. But is the property tax fair to all property owners every year?
By valuing all property, a rate can be set to produce the tax levy.
Until 1998, revaluations were required once every 10 years. Back then some towns revalued even less often and some tax assessors were actually unable to tell me the date of their last revaluation. But towns still collected the required tax levy every year.
During those early years property values remained fairly stable and most people saw their taxes change in step with the changes in the budget. But things changed dramatically in early 2000 and property values escalated. People were buying property at increasing values and being taxed on older assessments. Property owners rightly felt this was unfair.
The solution was to require triennial revaluations. New owners would now pay taxes based on fair market values.
But what was the impact on the rest of the property owners? Were their property tax increases used for the tax levy or for something else?
Let's imagine that one year, say 2007 which was a revaluation year, North Kingstown did not increase its tax levy. NO tax increase. The taxes would have looked like this:
For residential properties up to $100K the average tax would have increased 64.5%
For residential properties from $100K to $200K the average tax would have increased 13.6%
For residential properties from $200K to $500K the average tax would have decreased -0.4%
For residential properties from $500K to $1M the average tax would have decreased -5.4%
For residential properties from $1M to $5M the average tax would have decreased -11.6%
In 2007 owners of the lower priced properties would have received large tax increases which did not go to the town but merely lowered the taxes of other tax payers, in this case the owners of more valuable properties.
How can anyone call this fair? We can have a system that taxes both new and existing owners fairly every year. There is a solution.
For more see R.I.G.H.T.