Tuesday, December 11, 2007

The Independent Columnist

Wednesday, December 11, 2007
With apologies to "the Onion"

Property taxes finally received the attention it deserves on Smith Hill. The Rhode Island legislature is considering a bill to re-evaluate this ancient tax system after months of debate in committee. Sources close to Senate and House majority leaders have released documents to this "reporter" on the condition of anonymity that suggest that lawmakers see nothing wrong with the 250 year old system in current use and are reluctant to make changes.

Under the traditional ad valorem tax system tax payers pay taxes to their town based on the market value of the property they own. The rate used to determine each tax bill depends on (1) the amount of the tax levy and (2) the total market value of the tax base, or all community property that is taxable.

New owners are assured that the rate used to tax them on the market value of their purchase will be based on current market values for the entire tax base, thus avoiding the unfair practice of using older and usually lower valuations as the basis of the tax rate and applying the rate to new, current market values of new buyers’ property. Revaluations will be done every three years instead of every ten to fifteen years common prior to 2000. “This assures fair treatment for new buyers” said the House minority leader

The tax levy itself will become limited to annual increases of no more than 4% which is very good news to property owners. Of course, while the levy is limited to 4% increases there is no limit to the increase in any individual tax bill since the market determines the value of each property.

In fact some waterfront property owners in the Saunderstown area of North Kingstown this year have seen their taxes plummet 25 to 30% while others in the same neighborhood have received increases of 20 to 50%. When asked about this apparent breakdown of logic and fairness a prominent senator responded that "the market is the best judge and we should let it work".

We are told by several trusted sources that the sentiment on the Hill is that taxes based on market values is the best way to pay for local government even if it means that some will be forced to sell their homes.

When reminded that the market was responsible for the sub-prime debacle and that market prices might be artificial and innaccurate indicators of wealth the Speaker of the Senate said, "I don't know about that but you can be sure we will try to do everything possible to help our citizens, as we always have."

Senate leaders have assured us that the present system is in everyone’s best interest as it brings in fresh new faces to Rhode Island and is good for the real estate business. “We believe in tradition and this tradition is hundreds of years old” said the House majority leader in a leaked memo.