Location, Location, Location
It seems that property tax reassessment reform is nearing final passage in the House (it’s already passed the Senate). I’ve written before about this bill, but here’s a reminder: It would mandate that local jurisdictions roll back property tax rates in response to higher assessments. Advocates argue that the rollback provision is necessary because it ensures that city officials approve tax increases by a vote, rather than by simply inflating property values.
But I still don’t completely buy the whole “rollback” argument. While I recognize the potential for appraisal abuse, people certainly don’t feel upset when their house depreciates and they then pay less in taxes. So why should it work in reverse? And if we extend the argument further, why not mandate the same thing for sales tax rates? If the price of a good appreciates in value, should consumers pay a lower tax rate on that good so that the nominal amount of tax is the same as before? Certainly, that would seem silly. But maybe I’m just missing the point.
I definitely disagree with the recommendation that a fair compromise would involve simply adjusting property appraisals by a county average for a particular type of property. Property values are idiosyncratically determined by their specific locations, and it would be patently unfair (in my opinion) to subsidize booming neighborhoods at the expense of houses that have lost thousands of dollars in value.