As Home Values Fall, Property Tax Revolt Brews

In many cities across the US, homeowners are filing record numbers of assessment appeals, wanting their property taxes to reflect their shrinking value of their houses.

Homeowners watching the value of their houses slowly ebb are storming tax offices from Ann Arbor, Mich., to Atlanta, demanding that county officials reassess their homes and lower their property taxes.

It is a question of fairness, says Gene Burleson of Atlanta, who stood in line April 1 to appeal his assessment. His house has lost 25 percent of its value since it was last assessed, he adds: "I'm just trying to insulate myself from coming tax increases."

Property taxes have become a rallying point for disgruntled Americans because, unlike sales or income taxes, they can be challenged directly by individual citizens: Some 40 percent of assessment appeals are successful. Yet the movement threatens already stressed counties, putting the tax receipts that pays for schools and police at risk.

"The property tax is the only tax where [a citizen] can go in and eyeball the guy," says Billy Cook, executive director of the Institute for Professionals in Taxation in Atlanta, noting that appeals often lead to small-claims-style hearings to press one's case against the county's tax valuation.

"Think of all the taxes in the U.S.: The taxpayer renders their returns and the government audits to make sure you do it right," adds Cook. "The only tax where the taxpayer audits the government is the property tax."

In many areas across the U.S., home values have dropped so rapidly that assessors have not been able to keep up. Even as their home values depreciate, homeowners are likely to see increases in their tax rates, because appraisals sometimes have been done years earlier.

How about flat property taxes, that would neither rise or fall with ‘property value’, but use a combination of (1)# of residential properties, (2) # of commercial properties, (3) miles of paved road and amount of road-frontage for each property, (4)# and volume [how many baths & kitchens] of sewage demands for each property unit.

From those stats, one could devise some formulas to produce a set of flat property taxes.

Some examples:

(1)* residential factor [1] + (2) * commercial factor [1 +?] = number of ‘property units’, * general administration $ rate = X amount of ‘property taxes’ for general administration, police & fire; and the individual property owners tax is their portion of the whole, as either 1/X for a residential unit or 1+?/X for a commercial unit;

a # [in fractions to 4 decimal places, representing a single property’s portion of the whole] of road frontage for a property * commercial factor/or * residential factor * road maintenance $ rate = amount of ‘property taxes’ for road maintenance, street cleaning, storm drain maintenance & clearing - relative to a single property

# of sewage contribution units [# of kitchens + # of baths] * sewage $ rate = property taxes for sewage treatment services

A total ‘flat property tax’ would be the sum of the independently measured components, like in the samples above, each of which is calculated on flat rates and measurement factors attributable to each property, regardless of ‘market value’.

This type of system would end the tyranny of the artificiality of ‘appraisals’ and taxes based on them, as well as the problem that such appraisals are never kept up-to-date in the first place.

For commercial property owners it would mean they do not escape ‘their fair share’ of taxes, just because they let their property run down, and for residential owners ‘their fair share’ is based on their ‘fair share’ of services rendered NOT what they paid for their house.

This type of system also makes the relationship of local budget increases to property tax increases direct and transparent, because each component of the tax is directly related to an area of the local budget and nothing is hidden by any adjustment in the amount of tax due to differences in property values, either over time or between different properties.

With this type of system, setting caps on budget increases based on inflation is easier to establish and monitor.

[notice, under my assumptions, a house with more road frontage and more kitchens and baths would pay more for the kinds of services that support roads and sewers; thus some larger homes would pay more than some smaller homes; but rich or poor, all would pay the same flat rates for the cost of general services from the city offices and police and fire protection]

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