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Tax Structure Affecting Individuals' Decisions
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Nov. 22nd, 2008 | 10:27 am
http://www.nytimes.com/2008/11/16/nyreg
This is good little article that looks at how city-specific tax structure can really affect individuals. Now that the course is all wrapped up (and the hefty amount of studying on taxes) I can see a lot of class examples in this article.
The specific issue is when and how taxable assets are assessed (homes in this article). A couple demolished and rebuilt a bigger house; they expected their taxes to go up, but not to triple. Many of the resident homeowners have their property tax figures based on very old assessments/pricing. New assessments are made when houses are improved or built-new, but not when they change hands. The couple in the story show a good example of a possible violation in horizontals equity. Because they chose to rebuild they face higher taxes, but an equally-able couple already owning the same type of house could very easily have tax figures based on old assessments.
Also, there was a question in the review which we didn't need to study but is related. It was about how developers built narrow multiple level houses on a canal because taxes were based on canal frontage. In this case, their is incentive for people to not renovate or build new home in this area. It isn't exactly parallel, but it shows how existing tax structure can affect future decisions.
The article directly assesses equity as a concern. One of the cities mentioned in the article actually backed away from a tax reassessment. It doesn't give specifics, but I imagine it is because of anxiety over possible negative reactions from the people and political consequences (it mentioned something about politicians wanting to keep their seats).
This is good little article that looks at how city-specific tax structure can really affect individuals. Now that the course is all wrapped up (and the hefty amount of studying on taxes) I can see a lot of class examples in this article.
The specific issue is when and how taxable assets are assessed (homes in this article). A couple demolished and rebuilt a bigger house; they expected their taxes to go up, but not to triple. Many of the resident homeowners have their property tax figures based on very old assessments/pricing. New assessments are made when houses are improved or built-new, but not when they change hands. The couple in the story show a good example of a possible violation in horizontals equity. Because they chose to rebuild they face higher taxes, but an equally-able couple already owning the same type of house could very easily have tax figures based on old assessments.
Also, there was a question in the review which we didn't need to study but is related. It was about how developers built narrow multiple level houses on a canal because taxes were based on canal frontage. In this case, their is incentive for people to not renovate or build new home in this area. It isn't exactly parallel, but it shows how existing tax structure can affect future decisions.
The article directly assesses equity as a concern. One of the cities mentioned in the article actually backed away from a tax reassessment. It doesn't give specifics, but I imagine it is because of anxiety over possible negative reactions from the people and political consequences (it mentioned something about politicians wanting to keep their seats).