How the government could more equitably assess property taxes

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Over the last few years, many people have experienced situations in which the property they purchased several years ago was assessed at a higher value than it would be in today’s market. Often, when one tries to appeal the assessment, the board of assessors can actually rule that the assessed value is higher than the value at which the property was assessed when purchased. If someone was successful in an appeal, and was able to reduce the assessed value of the property, many of his or her neighbors would be upset because that could adversely affect their home values. Property taxes are a primary revenue stream for government.

Now that you have an appreciation for the government’s need of property tax revenue, as well as an understanding of the taxpayer’s side, complete the following questions:

Do you have a recommendation as to how the government could more equitably assess property taxes?
Consider the best way your recommendation could be implemented, keeping in mind the government’s need to plan for budgeting, and the best way to maintain the revenue streams.
Discuss how the revenue stream may be made up if the revenues from property taxes have to be decreased. Do you think the government will increase the tax percentage or increase taxes in another area in order to compensate?

Sample Solution

How the government could more equitably assess property taxes

Property taxes are calculated by taking the mill levy and multiplying it by the assessed value of the owner’s property. The assessed value estimated the reasonable market value for your home. It is based upon prevailing local real estate market conditions. Effective property tax rates differ widely across and within states, making them difficult to compare. In addition to variation in statutory tax and rates, local governments use various methods to calculate their real property tax base. The taxing jurisdiction typically assesses the real property value by estimating what the property would sell for in an arms-length transaction. Many states have imposed limits on property tax rates, property tax revenue, or increases in assessed property values, reducing reliance on the property tax as a source of revenue. States and local governments also often use limits, exemptions, deductions, and credits to lower tax liability.

    • R&D achievements and its commercialisation.
    • Improve efficiency of manufacturing sector by tariff reduction and rationalisation to ensure competitiveness in local and foreign markets.
    • Public-private partnership in defence production and removal of discriminatory regulations on import of raw material, parts and assemblies.
    • Fiscal and monetary incentives to invest and develop engineering and chemical industries.
    • In view of WTO regime, manufacturing sector be encouraged to upgrade technology, replace existing machinery and introduce BMR to be competitive in the world market.
    • Industrial estates be developed in close proximity of large engineering units. Development of vendor industry, transfer of technology and provision of credit will follow it.
    • Activate judiciary for fast, efficient and transparent dispute resolution to facilitate access to technology and foreign investment through strategic alliances.
    • Facilitate and encourage private sector to enter into joint ventures with multinationals and use brand names to market products.
    • Cost of doing business is made attractive by reducing utility prices, simplifying the procedures of registration, avoiding multiplicity of taxes and restricting use of discretionary powers by the tax authorities.
  • Encourage value addition in textile industry to remain competitive in the world market.
  • Re-orient the education and training in accordance with manpower requirements of the existing and

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