Alexander Caramanica was surprised to find a letter in the mail on Sept. 21 that said he would have an assessment appeal hearing on Oct. 11.

“I wasn’t sure what it was. The first thing I thought was, ‘I didn’t appeal anything,’ ” Caramanica said. “It didn’t say who was asking for the assessment.”

Caramanica went to the Bucks County Courthouse the following Monday. That’s where he learned that the Central Bucks School District was appealing the assessed value of his Buckingham home — and 36 other homes across the school district.

The other 36 homeowners likely were similarly surprised and possibly perplexed.
“I’m a little bit confused about the whole process. I still don’t know exactly how they picked my house as opposed to somebody else’s house,” said Mike Peralta, the owner of a Doylestown home that school district staff say is underassessed.

“How did they come up with the 37?”

Kurt Krause, the owner of a Doylestown Township home that school district staff say is underassessed, said he thinks he and the other property owners are “being singled out unfairly.”

Central Bucks had an outside firm look at the assessed values and sale prices of every home in the school district. The firm determined which properties were underassessed and how much revenue the school district could gain if it appealed the assessments of each of those properties. The firm assigned a number to each property and presented the data to the school board without names or addresses attached. The school board decided in February to appeal only those properties it thought it could get $4,000 in property tax revenue from each year. The list included 37 homes in Buckingham, Doylestown, Doylestown Township, New Britain Township and Plumstead.

The school board had the firm do appraisals and gather information about comparable homes. Even though the final results showed that only 11 of the properties each would bring in more than $4,000 in property taxes annually, district officials decided to continue with the appeals.

School board President Paul Faulkner said early in September that the school board would not withdraw the appeals because it already had made an investment in them.

Central Bucks also is appealing the assessments of seven commercial properties in Warrington.
District officials could gain as much as $767,234.22 if they win the appeals.

Faulkner said he understands that some property owners might feel the assessment appeals are unfair.
But, he said, “I don’t know that taking money from our kids and their education without doing something about those that aren’t paying their fair share is fair either.”

One property in Doylestown currently is assessed at $47,040. But the district’s data says it is worth $925,000 and should be assessed at $100,085. If the district’s data is right, the property owner is paying about $6,500 less in taxes than he should.
“The whole concept here is what our country was built on, which is fair and equitable taxation for all,” Faulkner said. “Everybody should be paying their fair share.”
Faulkner said the district is struggling for income.

“We don’t have the ability to increase our funding beyond the state limits, which is not keeping pace with the decline in real estate taxes. We can’t just go raise our prices. We can’t just sell more stuff like a business can. We rely on real estate taxes, which is a model we’ve been handed. We didn’t create it,” Faulkner said.

Scott Nichols, the owner of a Doylestown home that school district staff say is underassessed, said he’s talked to some of the other 36 property owners and “Nobody I have heard from objects to paying their fair share of taxes.”
“We do object to paying more than our fair share of taxes because the assessment system is broken and has been for years,” he said. “There are plenty of people in Bucks County with less valuable homes who will be paying more than half as much as I will be.”

Nick Molloy, a realtor and the owner of a Doylestown property that school district staff say is underassessed, said he thinks the assessment appeals are unfair unless the school district looks at a whole municipality.

Many of the property owners plan to fight the appeals. Several said they think they have not been given a fair opportunity to prepare their cases.

The school district has “had a year to come up with this appraisal of people’s homes,” Caramanica said. “We’re given less than two weeks? And then we’re given five minutes to discuss this with the Board of Assessment?”

The owners of all 37 residential properties and seven commercial properties are scheduled to have assessment appeals hearings with one member of the Bucks County Board of Assessment on Oct. 11. Each hearing is scheduled to last five minutes. The Board of Assessment will discuss the hearings at the next full meeting of the board and render a decision.

Nichols said he thinks county officials should step in and stop the assessment appeals, and then fix the problem by doing a county-wide reassessment.

http://goo.gl/j75uX

(Since this blog is dedicated to property tax and other relevant subject, I only covered property tax and exclude other taxes.)

Some taxes work better than others. Good taxes do little damage to the economy and are difficult for taxpayers to avoid by changing their behavior. And if you look at America’s long-term budget projections, we’re going to need more taxes in the future, so we should be extra sure that we’re choosing good ones.

Property taxes: Everybody hates property taxes because they are hard to avoid. But that’s a good thing — it means property taxes are relatively non-distorting. In fact, taxes on land are completely non-distorting: Raising them won’t cause any reduction in the amount of land. Taxes on improvements do distort the economy (they discourage the construction of buildings) but not as much as some other taxes. After all, once a house exists, you can’t easily move it in response to tax changes.

In practice, property taxes appear to be the least economically damaging of the major categories of taxes collected, less than sales tax, personal income tax or corporate income tax. This makes sense given a related finding: The mortgage interest deduction, despite its vast cost, does little to encourage homeownership. Use of real property appears to be fairly insensitive to tax favorability, which makes it a good thing to tax.

Property taxes have a reputation for being regressive. In fact, they are close to distributionally neutral (see graph on page 4) though taxpayers in the top 1 percent do pay a smaller share of their income than the rest of the population. (You can only use so much real estate). The main reason property taxes can be regressive in practice is how their proceeds are spent: Instead of going into a statewide pool, they get plowed into high-quality services in the jurisdictions where a lot of tax is collected.

But that problem can be fixed. One way is to impose a statewide property tax, as in New Hampshire, so that residents of low-income jurisdictions share in the tax proceeds from high-value property. Another option, used in many states, is to use the state income tax to plug holes in the budgets of municipalities where the property tax base is weak. Homestead exemptions (fixed shares of property value that are excluded from tax) can also increase progressivity.
Local government can’t be financed solely with property tax, but the choice of many states (especially California) to back away from property tax over the last four decades has been a mistake. Property taxes are an efficient and effective way to finance government, and we should learn to love them.

http://goo.gl/F44Ci

U.S. local governments’ property- tax collections increased 6.2 percent during the second quarter from the year before, the Census Bureau reported, easing the strain on cities from the housing market crash.

The increase to $91.1 billion during the three months ending in June marks a shift from the year before, when collections dropped for the period. Including states, property taxes rose 5.7 percent to $94.4 billion.

The rise indicates cities may be recovering from the worst of the financial setbacks triggered by the slide in real-estate prices, which forced them to dismiss workers and cut their budgets to make up for the lost revenue. Such spending cuts have been a drag on the nation’s recovery from the recession that ended more than three years ago.

The Census report was released amid signs that low mortgage rates are boosting the real estate market. In July, property values in 20 cities rose 1.2 percent from a year earlier, the biggest twelve-month advance since August 2010, according to the S&P/Case-Shiller index, released today.

http://goo.gl/PuFKf

The Canadian Taxpayers Federation says New Brunswick’s new approach to property taxes will mean higher bills for people who live in fast-growing urban areas, such as Dieppe.

Local Government Minister Bruce Fitch released a discussion document on property tax reform that called for a number of changes.

Kevin Lacey, the Atlantic director for the taxpayers federation, said the most significant change that will affect the largest number of citizens is the elimination of the three per cent property assessment cap, which was introduced two years ago.

The cap has given homeowners and homebuyers a degree of security, he said.

“So if you go and you’re going to buy a house in Riverview tomorrow, you would know generally what you’re going to pay in taxes over the coming years,” Lacey said.

The changes don’t deal with rising assessments, which are used to calculate property taxes, so there could be major jumps in taxes, he said.

“When this comes off, you’re now at the whim of the assessments and if your assessment goes up and the tax rates don’t change at the municipal level, then you’re going to end up paying more tax,” Lacey said on Thursday.

He said the changes put the responsibility on municipalities to deal with tax rates.

There will be a permanent exemption given for homeowners who took advantage of the two-year assessment cap.

http://goo.gl/1Z3Zj

http://realtytaxconsultant.com

The Halifax developer of a Northwest Arm heritage property is appealing the land’s assessed value of $1,658,700 to the provincial Utility and Review Board.

Marterra Inc. contends that the assessed value of the half-hectare property at 10 Kirk Rd. in Jollimore subdivision should be lower because it has been incorrectly classified as waterfront.

“As the properties are not waterfront, the property value for tax purposes should be lowered,” Marterra director Jennifer Corson said in the company’s recent notice of appeal to the board.

In an interview, Corson said the Halifax Port Authority controls a strip of the seawall along the waterfront that required Marterra to sign a lease that, if revoked, could prevent waterfront access.

That being the case, she said the property’s assessed value and its taxes should be lower.

“That wasn’t looked at correctly.”

Marterra appealed the assessment by Property Valuation Services Corp. in June to the regional assessment appeal court.

The company argued that it discovered after buying the property that there was an easement that ran through it and that the waterfront was infilled lands it didn’t own.

Frank MacDonald, an assessment appeal court member, dismissed Marterra’s appeal in July.

“The infilled area is the ‘de facto’ accepted boundary extent of the property and it is at the water,” MacDonald said in a written decision in which he gave “no weight” to the port authority lease issue.

“I find that this property is properly classified as water frontage. I dismiss the appeal and confirm the assessed value.”

Plans for the property, which features an arts-and-crafts-style house built in 1914 and two other existing houses, include nine plots for new single-unit homes that will circle an antique swimming pool all residents will have access to.

The building lots, which are now being sold, start in the low $200,000 range.

No date has been set for the board hearing, which Corson said has no bearing on the development’s progress.

http://goo.gl/IfrnZ

http://realtytaxconsultant.com

MONTREAL – Executive committee chairperson Michael Applebaum insisted he was sticking to his promise not to raise taxes beyond the rate of inflation, even as he announced his administration’s intention to do just that.

Property taxes will rise by 3.4 per cent in 2013, according to the administration’s budget orientations, presented to the city’s finance committee Friday. That hike does not reflect additional local tax increases that are sure to be imposed by many of the city’s 19 boroughs as they make their budget predictions in the next few weeks.

Applebaum admits the hike is beyond the projected inflation rate for next year, which he estimates at 2.2 per cent, but he said the remaining 1.2 per cent is due to an increase in the special tax, introduced in 2003, to replace the city’s aging water distribution system.

“The budget we are talking about is a responsible budget that respects the ability of residents to pay,” Applebaum told reporters after presenting the administration’s budget orientations to the finance committee Friday morning at City Hall. The committee will hold public hearings on the budget at the beginning of November, and can recommend changes before the final budget goes to a vote at city council in mid-November.

“I said in 2013 there would be no tax increase beyond the inflation rate of 2.2 per cent, and we have kept it (the operating budget increase) to that. Then there is the tax dedicated to replacing water infrastructure which is really an investment in clean drinking water for the future.”

If this budget is passed without changes, Montreal’s overall budget for 2013 will be $4.9 billion, up 3.8 per cent from $4.74 billion in 2012.

The city’s expenses are growing much faster than its revenues, so in 2011 the administration announced a three-year plan to cut its labour force by almost 1,000 jobs. That plan is a year behind schedule, but Applebaum said that with a new city manager in place since January 2012, he expects to achieve that goal by the end of 2014.

Over the past year, 420 full-time equivalent positions were cut, and the plan is to cut only 115 more this year, which leaves about 444 to cut in 2014.

“The plan was to reduce the workforce by 1,000 (full-time equivalent positions) over three years,” Applebaum said. “Unfortunately, it is not going as well as we would like … but I am confident we have a city manager now who understands our objectives and wants to help us obtain our goals.”

He said most of the 115 full-time equivalents to be cut next year will be from the central city services. Although some administrative positions could be eliminated in police and fire department services, no police officers or firefighters will be cut. In 2012, the equivalent of 56.3 posts were cut from the boroughs, 1.3 from the fire department, 44 from police services, and 318.4 from the central city services.

Applebaum said the increased cost of providing police services during the student uprising this spring and summer will not affect the budget, because the city estimates the increased cost at about $15 million, which is the amount the province has agreed to cover for that unusual expense.

The city’s contribution to the Société du Transport de Montréal (not including funding from Montreal Island suburbs) was $388 million in 2012, and will be upped by $10 million to $398 million in 2013, if nothing changes before the final budget is passed. The STM had been counting on a $42 million increase from the city.

Like most cities in the province, Montreal is grappling with a huge challenge in fulfilling its pension obligations in the wake of the 2008 market meltdown. Negotiations are underway with unions to change the pension contribution plans, which currently sees employees paying 30 per cent toward their pension plans, while the cities pick up 70 per cent.

Applebaum said those negotiations are going well, particularly with the blue collar workers, and for 2013 he is counting on a reduction to pension plan contributions for the city of $17 million.

“We intend to reduce the city’s pension burden by $50 million over three years. This year we expect to attain $17 million, or about 20 per cent of the goal,” he said.

As announced in June, the city intends to increase its funding to the 19 boroughs by $41.2 million in 2013, including an increase of $11.9 million to certain boroughs recognized as chronically underfunded. In 2013, for the first time, taxpayers will see a line item on their bill that shows what portion of revenue goes to their local borough.

Véronique Fournier, a member of the opposition Vision Montreal and vice chairperson of the finance committee, said the administration is being “far too timid” on pension changes and needs to demand that the province intervene. She added that promised economies of scale on rolling stock and other city spending don’t seem to be materializing with this budget.

Projet Montréal’s Peter McQueen, who also sits on the finance committee, said the city needs a fund for public transit, much like the water infrastructure replacement fund, to help the STM make much-needed improvements.

http://realtytaxconsultant.com

Property taxes on a median value home in Wisconsin were $3,294 in 2011-12, according to the Wisconsin Taxpayers Alliance. Using recently released municipal tax information, WISTAX reviews the impact of home values and rates on local property taxes in its latest report, “A Recap of 2011-12 Property Taxes.” WISTAX is a nonpartisan organization dedicated to public policy research and citizen education.

Property taxes on the median-value home were less than $2,000 in 10 counties, all in the northern half of the state. Taxes were highest in Dane ($4,811), Waukesha ($4,307), Milwaukee ($4,187), Ozaukee ($4,169) and Pierce ($4,128) counties.

In St. Croix County the median home was valued at $225,700, with an estimated 2011-12 property tax of $3,931. This is a 10.1 percent change in the past 10 years.

Property tax amounts differed across the state due to varying home values and tax rates. Median home values ranged from $92,600 in Menominee County to $262,200 in Waukesha County. Average tax rates ranged from $9.32 per $1,000 of equalized (or fair market) property value in Vilas County to $25.27 in Milwaukee County.

Over the past 10 years, statewide net property tax levies rose 44.3 percent, while property taxes on the median value home rose 23.5 percent. The difference is partly due to new construction absorbing some of the levy increase. New homes resulted in more households over which to spread the total levy. New construction accounted for about half of the statewide increase in equalized values. Tax shifting from one kind of property to another also caused residential property taxes to grow less. While the value of the median home grew 33 percent, the value of commercial property rose more than 60 percent, shifting the property tax burden to commercial property.

Ten year tax increases on the median-value home were under 12 percent in Brown, Marinette, Ozaukee, Richland and St. Croix counties. They were over 34 percent in Adams, Columbia, Menominee, Sauk and Walworth counties. Dane County was the only large county where taxes rose more than 30 percent.

http://goo.gl/JOJ9O

HAZLET — With tax appeals on a steady rise, officials are hoping to set a new base for property values in the township.

At the April 17 meeting, the Township Committee voted to begin the process of conducting a reassessment, which would adjust property values for the 2013 tax year.

“There’s a general understanding in the community that property values have decreased the last several years,” Township Attorney James Gorman explained at the meeting.

“Hazlet was ordered by the county to do revaluations when values were rapidly rising. Now that they are coming down, the numbers that were placed on the assessments seem to be too high.”

Gorman said the number of tax appeals had more than quadrupled in the last three years.

According to township documents, the township refunded nearly $21,000 on 52 appeals that were filed with the Monmouth County Board of Taxation in 2010.

The township refunded more than $43,000 on the 104 appeals filed with the county in 2011.

But with the deadline for 2012 appeals now past, 216 appeals have been filed with a potential refund of approximately $190,000.

“There’s concern that it’s going to become 400 [appeals] next year, unless the values are adjusted to reflect true market value,” Gorman said.

“We’ve been pretty successful, but they add up. If the numbers increase, the exposure increases and the service fees increase, so you try to deal with it.”

Hazlet Mayor David Tinker emphasized the financial burden tax refunds have on the budget, noting that the township collects taxes for the school and county, as well.

“If we lose a tax appeal, we have to refund the school tax and we don’t get it back. The county will eventually float [the refund amount] back to us, but that school tax that we give back to you? It’s gone,” he said.

In March, the Township Committee approved a $20 million budget that calls for an average tax increase of $65.28 for a taxpayer with a home assessed at the township average of $301,490.

The Hazlet Township Board of Education approved a $48 million budget for 2012-13 with no tax increase for the second straight year.

Gorman said the reassessment process will cost the township approximately $200,000, which could be spread over a five-year period.

He said the re-evaluation process, which the township went through before the 2009 tax year, was more expensive and time consuming.

“The tax assessor researches and keeps databases on all recent sales, and her recommendation — and I agree — is that we look at a reassessment of the property values,” Gorman explained.

“You are basically looking at data from sales. You’re not going through and inspecting the residential properties. You will inspect the commercial properties,” Gorman explained.

The Township Committee approved the resolution with a 4-to-1 vote.

Committeeman Joseph Belasco cast the only dissenting vote and, in an April 19 interview, said he was more concerned with residents who may have to pay higher taxes.

“If by any chance a house was assessed higher, then you’re going to get doublewhammied,” Belasco said.

“If most people are going to be paying the same thing, what’s the difference? But there are people that may get hurt and it may not be equal all across the board.

“People are hurting all over. I would love to say everybody’s house value goes down 10 percent, but you can’t do that legally,” he added.

http://goo.gl/zYZ68

Some taxes work better than others. Good taxes do little damage to the economy and are difficult for taxpayers to avoid by changing their behavior. And if you look at America’s long-term budget projections, we’re going to need more taxes in the future, so we should be extra sure that we’re choosing good ones.

This morning, I wrote that estate taxes and capital gains taxes are both inherently troubled: They encourage taxpayers to jump through hoops to avoid taxable transfers. But if we can’t rely on these sorts of taxes, which ones should we rely on?

Here is a list of five good taxes. They are “good” for one of two reasons: they are hard to avoid, and therefore do little to distort economic behavior; or they distort behavior in ways that make the economy more efficient. Either way, these taxes are excellent ways to finance the government, and we should raise them as a part of tax reforms that reduce deficits and cut other taxes.

1. Wage taxes or consumed income taxes: While capital income can be deferred, for example by holding onto assets that have appreciated, wages are hard to hide. The payroll tax is a quiet and efficient revenue generator for the federal government — it’s so quiet people are often surprised to learn it raises almost as much revenue as the federal income tax.

One concern with wage taxes is that high earners may convert wages into capital income in an effort to gain favorable tax treatment. We can close this loophole by taxing consumed income instead of wages. Like a wage tax, a consumption tax won’t penalize people for saving instead of consuming. Unlike a wage tax, it would make issues like the carried interest loophole moot.

Taxes on wages or consumed income can and should be strongly progressive, especially because most of the other efficient taxes are regressive. This is why tax reformers are misguided when they focus on bringing down the top marginal tax rate on wages. Instead, we should broaden the tax base while keeping the top rate the same, in order to bring in more revenue. The added revenues should be divided among deficit reduction, tax relief for lower wage earners and reforms to eliminate the repeat taxation of capital.

Alternatively, the payroll tax could be increased and uncapped (currently, it applies at a much reduced rate on incomes over $110,100) while the personal income tax is greatly shrunk so it applies only to the affluent. The key barrier to base-broadening income tax reform is that it is difficult to eliminate politically popular income tax deductions, such as one for mortgage interest. The payroll tax already lacks most of these deductions and so makes an easier starting point for an ideal income tax.

2. Property taxes: Everybody hates property taxes because they are hard to avoid. But that’s a good thing — it means property taxes are relatively non-distorting. In fact, taxes on land are completely non-distorting: Raising them won’t cause any reduction in the amount of land. Taxes on improvements do distort the economy (they discourage the construction of buildings) but not as much as some other taxes. After all, once a house exists, you can’t easily move it in response to tax changes.

In practice, property taxes appear to be the least economically damaging of the major categories of taxes collected, less than sales tax, personal income tax or corporate income tax. This makes sense given a related finding: The mortgage interest deduction, despite its vast cost, does little to encourage homeownership. Use of real property appears to be fairly insensitive to tax favorability, which makes it a good thing to tax.

Property taxes have a reputation for being regressive. In fact, they are close to distributionally neutral (see graph on page 4) though taxpayers in the top 1 percent do pay a smaller share of their income than the rest of the population. (You can only use so much real estate). The main reason property taxes can be regressive in practice is how their proceeds are spent: Instead of going into a statewide pool, they get plowed into high-quality services in the jurisdictions where a lot of tax is collected.

But that problem can be fixed. One way is to impose a statewide property tax, as in New Hampshire, so that residents of low-income jurisdictions share in the tax proceeds from high-value property. Another option, used in many states, is to use the state income tax to plug holes in the budgets of municipalities where the property tax base is weak. Homestead exemptions (fixed shares of property value that are excluded from tax) can also increase progressivity.

Local government can’t be financed solely with property tax, but the choice of many states (especially California) to back away from property tax over the last four decades has been a mistake. Property taxes are an efficient and effective way to finance government, and we should learn to love them.

3. Gasoline taxes:These taxes are designed to act like a user fee. They fall on people who use roads and go into dedicated funds for road construction and maintenance. But the federal gasoline tax hasn’t been increased since 1993, and a third of its value has been eaten away by inflation. This has led to federal and state governments dipping into general revenue to pay for roads, an effective subsidy for driving which should be eliminated by raising the gas tax.

Gas taxes are also economically efficient because gasoline purchasers are not very sensitive to price. If gas prices rise by 20 cents a gallon tomorrow, you aren’t likely to immediately buy a smaller car or change your commute. And to the extent that people do change their behavior based on higher gas prices, many of the effects are beneficial: lighter traffic and less pollution.

In addition to raising the gasoline tax, states should subject gasoline to the general sales tax. Currently, nearly all states exempt gasoline, which leads to an implicit subsidy for driving over other kinds of consumption.

4. Carbon tax: Gasoline taxes are supposed to offset the cost of building and maintaining roads. An additional tax is needed to offset the cost of carbon pollution. This is the best kind of tax: a “Pigouvian tax” whose distortions are economically beneficial. Without the tax, people consume too much fossil fuel, enjoying individual benefits but producing pollution which harms others. The tax reduces fossil fuel consumption to the ideal amount while producing tax revenue. It’s a win-win.

5. Other “Sin” Taxes: While a carbon tax is the most important kind of Pigouvian tax we need, there are other opportunities to raise revenue while improving economic outcomes. We should particularly raise alcohol taxes, which appear to be below the socially ideal level even in the states with the highest taxes. (Alcohol consumption, while fun, leads to all sorts of ills including violence, accidents and socially-borne health care costs). States with low cigarette taxes should raise those, too.

http://goo.gl/F44Ci

Town officials in Brunswick are at odds with the group working to redevelop the former Navy base… And the issue is property taxes.

Leaders of the Midcoast Regional Redevelopment Authority had been negotiating with the town of Brunswick to create what’s called a “TIF” — a tax increment finance district. It would return part of the property tax money paid by tenants at Brunswick Landing to be used for maintenance and other improvements there.

But last week the Brunswick Town Council voted to end the TIF negotiations.

Town Manager Gary Brown says the council is concerned about the budget, especially the increase in local school costs. And he says Brunswick wants a seat on the redevelopment authority board— something its been trying to get for several years. Brunswick Landing officials say the loss of the TIF deal will cost them about 100-rhousand dollars this year. MRRA Executive Director Steve Levesque says they will find other revenue and savings to make up for the loss.

Town Manager Brown says he and the Council support the MRRA, and that their gripe is basically with the state. He says the Governor appoints members to the MRRA board, and that the Governor has been unwilling to choose a town official to sit on that board. Brown also says that earlier this year, the Governor and Legislature were talking about having the state take control of 80% of the property tax money from Brunswick Landing. That plan never went through, but he says the town now worries the state may push through other TIF changes that will hurt Brunswick. He says holding onto the TIF negotiations is their only leverage with the state.

http://goo.gl/7Pfcc