Abstract
5M /'ANY states are using or contemplating using use value in place of ad valorem assessment and taxation to influence urban expansion and land use [2]. This note attempts to provide quantitative estimates of the impact of use value assessment on the property tax base and tax rate. Although New Hampshire data are used in this analysis, the approach is sufficiently general to be applicable elsewhere. The impact of use value assessment depends on (1) the amount of total property valuation that qualifies for use value assessment, (2) the amount of eligible assessed valuation that participates in the program, and (3) the amount of taxes that are abated on the participating valuation. Because a use value assessment law does not currently exist in New Hampshire, these variables were either estimated from a cross-sectional sample or assigned values and varied parametrically. The amount of property valuation qualifying for use value assessment was estimated for each town (municipality) in the state. The estimating procedure consisted of first estimating the qualifying valuation for a sample of towns and then projecting the results of the sample to all towns in the state. Qualifying valuation was defined as the valuation of nonurban property. The amount of qualified valuation that enrolls or participates in a use value tax program depends on the economic incentives of the program. The impact of use value assessment was computed for five levels of participation, which varied from 10 to 90 percent of the qualified valuation. The amount of tax abatement on the participating valuation is the major incentive of a use value assessment tax program. The impact of use value assessment was computed for three levels of abatement; these varied from 30 to 75 percent of current taxes under the present system of ad valorem taxation. These variables were combined in a model designed to provide quantitative estimates of the immediate impact of use value assessment
Published Version
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