Re-Assessing Property Taxes

The entire system of property taxation needs to be examined. Currently, counties charge land owners property taxes based on the assessed value of their property. This tax money is spent locally on schools, and other services at the town and county level. Little, if any, property tax money goes to the state or federal level. If property owners fail to pay their property taxes after a certain period of time the land is repossessed and sold to the highest bidder. This system is flawed.

In 2006, property values in many major cities have more than doubled in one year. This is going to have profound effects on the banking industry as well as personal savings in the U.S. It will also spawn a huge amount on money in local government when property taxes are levied. Since the design of local government is somewhat stalwart and unresponsive, much of the money acquired from these taxes will be wasted. Oftentimes, county employees will raise their salaries or order more office supplies, simply because they have more revenue from taxes. This will result in a net loss for the community at large.

Every time someone takes out a loan to buy an expensive home, the bank is at risk. Money is withdrawn and perhaps spent in some other area of the country. If the economy in the local area declines, people default on the loans. This phenomenon has numerous results. The declining value of the dollar, combined with inflated prices on goods, and ultimately on the lack of cash flow in the economy. Assessors are currently the only government agency that can enter private property without a warrant or the consent of the owner. This brashness violates the constitutional amendment giving us the right to privacy.

Furthermore, some assessors have shown fraudulent behavior and have been linked to house selling scams for profit. Aggressive developers buy homes and fix them up in order to have them assessed at a higher value. They then sell the home for profit and strip the house before the sale is finalized or they take out a mortgage and default on the payments. Because the home was assessed at a higher value, all the taxable property values in the nieghborhood are subsequently raised which forces long term home owners to pay higher property taxes.

Currently, there is no standardization for assessing property value. Instead, assessors use arbitrary attributes to assess the value of homes. Often, the value is based on what other homes in the area sold for in recent years. People who have lived in a home for years should not be forced to have increased property taxes simply because someone decided to spend half a million dollars on house in their neighborhood. Assessors also use ambiguous factors such as "curb appeal" to determine a home's value. This practice penalizes people for beautifying their home. The bottom line is that we need a standardized practice for assessing property value. Less assessment will be needed with the system we propose.

We can simply determine the taxable property value as the selling costs at the time of purchase. Then, we would only need to assess the value when new homes are built, when people take out a mortgage or when people inherit property. Although people might try to sell their property to their children so that it will not be assessed, there could be at a law stating that that taxable property value cannot decline from its current state. If the property values decline dramatically, property owners should be able to request a reassessment from the county. This assessment should be determined using a simple assessment tool, like those available on real estate websites.

For instance, if a couple bought land in 1995, the value would be based upon their purchase price. They can sell it to their children in order to avoid assessment at the time of their death, but the taxable property value would still be what the couple bought it for in 1995. If they decided to sell the home for a profit, the new taxable value of the home would be based upon the selling price.

This reform, in and by itself, will stabilize the real estate industry. No longer will people be fleeing neighborhoods due to high property taxes and selling homes for high property values. This will prevent fraud and abuse by aggressive developers who buy homes simply to turn them for profit. The banking industry will become more stable as a result of this action as well. The real estate boom that resulted when Alan Greenspan lowered interest rates could be a huge downfall for America. Changing the way property value is assessed can stabilize the economy.