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A Good Tax: Legal and Policy Issues for the Property Tax in the United States
In A Good Tax , tax expert Joan Youngman skillfully considers how to improve the operation of the property tax and supply the information that is often missing in public debate. She analyzes the legal, administrative, and political challenges to the property tax in the United States and offers recommendations for its improvement. The book is accessibly written for policy analysts and public officials who are dealing with specific property tax issues and for those concerned with property tax issues in general.
- GenresPolitics
278 pages, Paperback
First published January 1, 2016
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February 17, 2020
Although this book doesn't quite offer what its title promises, a full-throated defense of the property tax, it does do a better job than almost any book I've read of analyzing all the sticky political and legal problems which surround the property tax, especially those that concern that pervasive problem of how to actually value the property being taxed.
One of the biggest problems involves the simple question of what property does a property tax actually tax. Ever since most states got rid of taxes on "intangible" property in the early 1900s, the property tax is supposed to focus only on "real property," land and buildings. But what if the federal government, which has sovereign immunity from state taxes, owns the land, but leases it out to private owners? As early as 1859 the California Supreme Court said that a the state could tax private mining permits as a "possessory interest" on federal land, and most other courts have agreed. But by the late 20th century, courts were agreeing to tax permits to offer concessions in an airport, clearly not real property by any measure. What about a private owner who leased a building for 99 years, and now gets only a fraction of the market rent due to land and price inflation? The majority of state courts say the property tax includes both the lessor and the lessee, so a lease doesn't diminish "the property's" value. But some, like Wisconsin, have argued that it is unfair to tax land at many multiples of the price it would sell for right now. Ever since Maryland began the process in 1956, all 50 states have passed laws demanding that farmland be taxed according to its "use value" not its "exchange value." But how do you tax use? By how much rent the property could bring, by the discounted value of its crop sales, by the value of comparable properties? All are difficult, and the author provides great examples of developers grazing a few cows, or even downtown landowners planting a few tomatoes, to get agricultural tax breaks before development.
Generally, the author abides by the economic consensus that the property tax is equitable, fair, and efficient, in that it serves to align the interests of the local government with the interest of the landholders, and vice versa. Both want to improve the value of their land through maintaining reasonable tax rates and quality services, otherwise the value of the property itself suffers. But the author also notes times when the property tax doesn't seem to abide by the ideal tax standards of consistency and ability to pay, such as when many states, at the behest of courts, began revaluing all land to reflect real market prices in the 1970s. Some people saw their tax rates go up by 250% in a year. She thinks the Massachusetts Proposition 2 1/2, passed in 1980, actually made a good compromise between the ideals of efficiency and equity. Its requirement that tax rates couldn't be above 2 1/2 % made all local districts revalue their land to market prices so they could get maximum taxes, while it's "levy limit," or total taxes raised, which could grow at 2 1/2% a year, allowed some overall growth in revenue, along with some voter-approved overrides. The fact that Boston Mayor Kevin White helped pass a constitutional amendment in 1979 allowing "classification" of different properties by use also helped. Although such classification is generally frowned upon (and can get out of control, with some states subdividing property in 55 classes), the Massachusetts law's minimum limit of 65% of all property taxes coming from residential property sanctioned the pervasive existing residential preference and made them more reasonable and clear. Basically, on Massachusetts, the author takes a judicious and evenhanded stance in an often heated debate. The book as a whole does the same, and it deserves attention from anyone interested in the important, but underrated, subject of the property tax.
One of the biggest problems involves the simple question of what property does a property tax actually tax. Ever since most states got rid of taxes on "intangible" property in the early 1900s, the property tax is supposed to focus only on "real property," land and buildings. But what if the federal government, which has sovereign immunity from state taxes, owns the land, but leases it out to private owners? As early as 1859 the California Supreme Court said that a the state could tax private mining permits as a "possessory interest" on federal land, and most other courts have agreed. But by the late 20th century, courts were agreeing to tax permits to offer concessions in an airport, clearly not real property by any measure. What about a private owner who leased a building for 99 years, and now gets only a fraction of the market rent due to land and price inflation? The majority of state courts say the property tax includes both the lessor and the lessee, so a lease doesn't diminish "the property's" value. But some, like Wisconsin, have argued that it is unfair to tax land at many multiples of the price it would sell for right now. Ever since Maryland began the process in 1956, all 50 states have passed laws demanding that farmland be taxed according to its "use value" not its "exchange value." But how do you tax use? By how much rent the property could bring, by the discounted value of its crop sales, by the value of comparable properties? All are difficult, and the author provides great examples of developers grazing a few cows, or even downtown landowners planting a few tomatoes, to get agricultural tax breaks before development.
Generally, the author abides by the economic consensus that the property tax is equitable, fair, and efficient, in that it serves to align the interests of the local government with the interest of the landholders, and vice versa. Both want to improve the value of their land through maintaining reasonable tax rates and quality services, otherwise the value of the property itself suffers. But the author also notes times when the property tax doesn't seem to abide by the ideal tax standards of consistency and ability to pay, such as when many states, at the behest of courts, began revaluing all land to reflect real market prices in the 1970s. Some people saw their tax rates go up by 250% in a year. She thinks the Massachusetts Proposition 2 1/2, passed in 1980, actually made a good compromise between the ideals of efficiency and equity. Its requirement that tax rates couldn't be above 2 1/2 % made all local districts revalue their land to market prices so they could get maximum taxes, while it's "levy limit," or total taxes raised, which could grow at 2 1/2% a year, allowed some overall growth in revenue, along with some voter-approved overrides. The fact that Boston Mayor Kevin White helped pass a constitutional amendment in 1979 allowing "classification" of different properties by use also helped. Although such classification is generally frowned upon (and can get out of control, with some states subdividing property in 55 classes), the Massachusetts law's minimum limit of 65% of all property taxes coming from residential property sanctioned the pervasive existing residential preference and made them more reasonable and clear. Basically, on Massachusetts, the author takes a judicious and evenhanded stance in an often heated debate. The book as a whole does the same, and it deserves attention from anyone interested in the important, but underrated, subject of the property tax.
July 31, 2024
The book stands out for its detailed exploration of the various issues surrounding property taxes, including fairness, efficiency, and the challenges faced by different jurisdictions. Morris expertly navigates the complex legal landscape, discussing historical developments, contemporary debates, and proposed reforms. This makes it an essential read for policymakers, legal scholars, and anyone interested in the functioning and reform of property taxation in the United States.
One of the book's strengths is its practical focus on how property taxes impact various stakeholders, from homeowners to local governments. Morris provides a nuanced discussion of the implications of property tax assessments and appeals, which is particularly relevant for those looking to understand the intricacies of how to appraise pinellas properties and similar real estate in other regions.
For individuals involved in property appraisal or real estate, "A Good Tax" offers valuable insights into the legal standards and policy considerations that influence property assessments. The book explains how property values are determined and the factors that can affect these valuations, providing a solid foundation for understanding the appraisal process. For example, the discussion on how to appraise Pinellas properties—considering factors such as market trends, local regulations, and valuation methods—is particularly relevant for appraisers and property investors in that area.
In summary, Richard D. Morris's "A Good Tax" is a well-researched and thought-provoking work that addresses the many facets of property taxation in the U.S. Whether you are a legal professional, a policy maker, or someone interested in real estate, this book offers critical insights into the complexities of property tax systems and provides practical knowledge on topics like how to appraise Pinellas properties. It is a valuable addition to the literature on tax policy and property
One of the book's strengths is its practical focus on how property taxes impact various stakeholders, from homeowners to local governments. Morris provides a nuanced discussion of the implications of property tax assessments and appeals, which is particularly relevant for those looking to understand the intricacies of how to appraise pinellas properties and similar real estate in other regions.
For individuals involved in property appraisal or real estate, "A Good Tax" offers valuable insights into the legal standards and policy considerations that influence property assessments. The book explains how property values are determined and the factors that can affect these valuations, providing a solid foundation for understanding the appraisal process. For example, the discussion on how to appraise Pinellas properties—considering factors such as market trends, local regulations, and valuation methods—is particularly relevant for appraisers and property investors in that area.
In summary, Richard D. Morris's "A Good Tax" is a well-researched and thought-provoking work that addresses the many facets of property taxation in the U.S. Whether you are a legal professional, a policy maker, or someone interested in real estate, this book offers critical insights into the complexities of property tax systems and provides practical knowledge on topics like how to appraise Pinellas properties. It is a valuable addition to the literature on tax policy and property
Displaying 1 - 2 of 2 reviews