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Property Tax: Assessment Problem

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 taxpayers side, I need help answering the following questions:
- would 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?

Solution Preview

In compliance with BrainMass rules this is not a hand in ready assignment but only guidance.

The problem is that the property prices have actually declined and those whose property has been assessed at higher prices want that the excess taxes should revert back to them. There are many properties whose prices have so declined that there is very little hope of property prices increasing in near future. In such situations it is equitable that the government should credit the excess tax paid by the tax payer. It is recommended that the government should appoint a panel of market agents who can speedily and accurately value the property at market rate (1). This will be the fair value of the property. Now the property has declined in value ...

Solution Summary

The answer to this problem explains how property tax should be treated equitably. The references related to the answer are also included.