Revalue Revaluation

Many problems facing Rhode Island taxpayers appear to be self inflicted.  For example, the huge deficits in union pension funds. City officials, taxpayers and union leaders ignored obvious funding deficiencies for many years creating crushing deficits that now threaten to bankrupt local communities.  Everyone loses yet we continue to do it.

One would expect that pocketbook issues producing increasing tax burdens would inspire taxpayers to act in their own best interest, but it doesn't seem to happen.  Why?

Revaluation might be partly to blame.  Revaluation to market values is considered a necessary part of the Property Tax because it is expected that it will distribute taxes fairly. Revaluation does ensure that a new owner will pay a fair tax on the property just purchased but is it also fair for the majority of taxpayers? Perhaps not.

With every revaluation there are many taxpayers who will receive tax increases but also many who will not. Think about it;  this means that just some, not all, taxpayers shoulder the full burden of any tax increase. And they aren't necessarily the owners of the more expensive homes or the wealthiest in the community. Those increases are just as likely to fall on the backs of owners of lower priced homes. That's just how real estate markets work.

Looking more closely at the data we find that the total increase paid by all these taxpayers exceeds the total tax levy increase, often by millions of dollars!  Thus, not only are these taxpayers paying the entire tax increase for their community but they are also paying for the lower taxes enjoyed by the other property owners! And tax roll data show that those with lower bills are just as likely to be owners of the most expensive properties. That's just how real estate markets work.  

In fact, revaluation disconnects our tax bills from the tax levies they are supposed to support. Despite increased local expenses, many thousands of taxpayers get lower bills, and when people don't feel the financial pain, they simply don't care! 

This presents a dilemma for local government: how to combine the fair tax a new owner receives after a revaluation with a fair tax for everyone else that's in harmony with the needs of the community, the tax levy. See one idea to address this problem at http://righttax.org.

And if we can involve all taxpayers fairly and reasonably it might even lead to better government overall.

Fair and Sane Property Taxes are possible

Can there be anyone left who doesn't understand that Rhode Island is in deep financial trouble? The Governor made it very plain in his State of the State address that in broad terms, we need to (1) cut expenses, (2) find added revenue, and (3) avoid raising taxes. All are reasonable goals.

How about a specific property tax plan to

1. attract business,
2. reduce the pressure on homeowners to leave because of high property taxes and
3. allow Rhode Island to adhere to its own Constitutional obligation to insure that "the burdens of the state are fairly distributed among its citizens"?

The idea? That no property owners, commercial or residential, shall receive a property tax increase greater than 4% in any one year. One might be tempted to think we already have accomplished this with the soon to be 4% cap on the local tax levy. Not so. There is no limit on the tax increase any property owner can receive as long as we require taxes based on periodic revaluations be applied to all tax payers every third year.

I am convinced that a 4% property tax limit would make our state a magnet for business to locate here, not only in their own self interest, but in the interest of their employees who might need to re-locate here. Maybe Rhode Island will no longer be the least business friendly state in the union.

Businesses would be able to take advantage of this limit as they prepare budgets instead of the very unpleasant (average) 37% tax increase received by three quarters of commercial property owners this past year long after their budgets were in place.

But it's not just about business. Homeowners whose property values have risen to the point that some must choose between paying their taxes or changing their life styles, or worse, selling their homes, would never happen again. And that assumes they could even sell their home in this awful housing market.

The R.I.G.H.T. plan will assure that every property owner will never receive more than a 4% property tax increase, that every property owner will pay his or her fair share. A new owner's initial tax bill will reflect true market value using a rate based on a revaluation, just as we do today.

At last, Rhode Island, The State of Fair and Sane Property Taxes. Sounds good.

For more see our website http://righttax.org