Property Tax System Research Articles

Vertical Inequity in the Taxation of Residential Properties: Evidence from Greater Mumbai

This paper explores the direction and extent of vertical inequity in the taxation of residential properties in Greater Mumbai. Based on the data from a representative sample of properties from the city and suburbs, it employs multiple econometric tools to explore the problem. Findings of the study indicate that the system is iniquitous and regressive. There is a significant disparity in the effective tax burden between the main city and suburban properties, and separate treatments are also accorded to high and low end properties. Such studies can be replicated in other contexts where property tax systems are alleged to be iniquitous.

Taxing Facebook Code: Debugging the Tax Code and Software

This article sets out to analyze both intellectual property laws and tax systems as applied to computer software. It analyzes software within intellectual property's established doctrinal framework, a difficult task due to the fact that software can encompass some combination of the traits of copyrights, trade dress, patents, and trade secrets. It then examines both the federal and state tax systems governing software. It shows that fitting software within current tax schemes presents unique challenges, as software contains both tangible and intangible elements, is subject to varying intellectual property protections, and can be delivered through various media. The article argues that there are a number of incongruous tax distinctions for software that are theoretically and analytically unsatisfactory. The article also points out certain flaws in the design of several tax preferences for software.

A Comparison of International Residential Housing Risk Premia

This paper contributes to this debate on the substantial risk-adjusted returns to real estate by first constructing a panel of housing risk premia for 13 OECD countries over a long sample period (1966: Q3 to 2004:Q4), and then exploring the relationship of these risk premia to changes in the financial market depth, equity market activities, property tax system, urbanization, zoning regulations and political orientation of the government. By comparing the experiences of housing markets in various developed countries, this paper adds to our understanding of what constitutes the real estate risk premium.

Property Tax Administration in Francophone Africa: Structures, Challenges, and Progress

In the context of a widespread focus on decentralization in Africa, there exists an imperative to find suitable ways to maximize potential own revenue sources at all sub-national government levels. This need in particular and the need for greater domestic resource mobilization by African states in general, has been exacerbated by the current global financial crisis that has led many countries into recession and left developed and developing countries alike scrambling to find solutions at home. In that regard, it has been widely suggested that property taxes would represent an important, if not the best, source of stable revenue at the sub-national level in both developed and developing countries. This paper analyses property tax systems as practiced in some francophone African countries, by identifying major issues and constraints they face; it also explores avenues to strengthen property tax as a source of national and/or municipal revenue.

Rising from the Ashes: The Impact of Proposition 13 on Public Libraries in California

In 1978 Howard Jarvis was the driving force behind California’s Proposition 13, a direct ballot initiative that sought to reform the state’s property tax system. Officially titled the People’s Initiative to Limit Property Taxation, Proposition 13 passed on June 6 of that year and not only immediately cut property tax rates but also limited further increases within the state. As property taxes were and still are a primary source of funding for many public libraries, California librarians in the ensuing years struggled to maintain facilities, staff, and collections in the wake of the cuts. Librarians were also forced to expand their advocacy role in order to better quantify and convey the value of libraries to the public at large.

Political Economy of Property Tax Reform: Hawaii's Experiment with Split-Rate Property Taxation

Economic theory suggests that switching from a general property tax to a split-rate tax increases land use efficiency and stimulates urban core development while preserving the environment and reducing urban sprawl. Under split-rate property taxation, land is typically taxed at a significantly higher rate than improvements. Beginning in 1965 Hawaii experimented with a statewide split-rate property tax system to encourage economic growth and effect land reform. The experiment was ended in 1977. Following the transfer of property taxing powers to the counties in 1978, some counties brought back the split-rate property tax at times. Since 2006, Kauai County has adopted the unusual practice of taxing improvements at a higher rate than land for most property classes. This article chronicles and explains the rationale behind Hawaii's state and county experiments with split-rate property taxation.

LAND VALUE TAX IN THE CONTEXT OF SUSTAINABLE URBAN DEVELOPMENT AND ASSESSMENT. PART II - ANALYSIS OF LAND VALUATION TECHNIQUES: THE CASE OF VILNIUS

Part Two of this article deals with problems related to land valuation. For that purpose, a site of 6.89 ares located in Švitrigailos Street XX, Vilnius, was selected as the research object and appraised using three approaches: the sales comparison approach, the MAMVA method and the mass valuation approach. Peculiarities of these methods in land valuation were reviewed and the recommendations were provided for land valuation for taxation purposes applicable in a new Model for Lithuanian Real Property Taxation System. Santruka Antroje šio straipsnio dalyje nagrinejamos problemos, susijusios su žemes sklypu vertinimu. Tuo tikslu buvo parinktas konkretus 6,89 aru ploto žemes sklypas, esantis Švitrigailos g. XX, Vilniuje, ir ivertintas trimis būdais: lyginamosios vertes, MAMVA metodais ir masinio vertinimo būdu. Apžvelgti šiu metodu taikymo ypatumai vertinant žemes sklypus, pateiktos rekomendacijos, kaip nustatyti mokestines žemes sklypu vertes ir pritaikyti siūlomam naujam Lietuvos nekilnojamojo turto apmokestinimo modeliui.

Urban Governance and Finance in India

Over 330 million people live in India’s cities; 35 cities have a population of over a million and three (Mumbai, Delhi and Kolkata) of the 10 largest metropolises in the world are in India. India’s cities are large, economically important, and growing. However, neither urban infrastructure nor the level of urban public services is adequate for current needs, let alone to meet growing demands. Dealing with this problem is a formidable challenge. Not only must adequate finance for the provision of services be found but it is critical to ensure that the money spent results in desired outputs and outcomes. To do so, local governance structures also need to be reformed and strengthened. This paper attempts to point the way towards some possible solutions by analyzing urban governance and finance in India in the context of lessons drawn from fiscal federalism theory and experiences of governance institutions and financing systems both in India and around the world. No one system of urban governance is likely to work equally well for all urban local bodies. However, the paper identifies some key reforms required to realize both the constitutional intent to encourage citizen participation in urban governance and the economic and politically desirable goal of ensuring greater accountability of urban governments. For example, the paper draws attention to existing ambiguities in the assignment system and underlines the need to undertake activity mapping to ensure clarity as well as to make independent agencies significantly accountable to elected governments in urban areas.The paper also discusses a variety of ways of augmenting the resources of the municipal bodies in the country including essential reforms in the property tax system and adequate exploitation of user charges and fees for various services delivered as well as ways of strengthening and improving central and state transfers to urban local governments. With respect to financing urban infrastructure, development charges should be used more effectively. More should also be done to utilize public lands more effectively. In addition, to a considerable extent capital expenditure requirements will have to be financed through borrowing so further development of the municipal bond market is important, as is more and more effective use of public private partnerships in some areas.

Proposition 13 and the Transformation of California Government

THE CALIFORNIA Journal of Politics & Policy Volume 1, Issue 1 Proposition 13 and the Transformation of California Government Jack Citrin University of California, Berkeley Abstract Thirty years after voters ushered in the tax revolt by passing Prop. 13, it remains the third rail of California government. In the throes of the budget crisis of 2008, there was no serious talk of reforming the property tax system. Prop. 13 was op- posed by the elite, supported by the masses, and attitudes have hardly changed in 30 years, despite substantial change in the composition of the electorate and years of handwringing about the effects of the measure on public education and other government services. But what fairly can be labeled a revolutionary event neither ushered in the millennium promised by its promoters nor brought on the apocalypse prophesied by its detractors. It did change the way of doing political business in California. Power shifted from local governments to the state, from the legislature to the governor, and from representative democracy to plebiscitary government. KEYWORDS: Proposition 13, taxes, property tax, California politics www.bepress.com/cjpp

Three-rate property taxation and housing construction

This paper examines the effect of property taxation on housing construction. In 2001, Finnish municipalities were allowed to levy an extra property tax on undeveloped land zoned for housing. Municipalities that adopted the new tax instrument have a three-rate tax property tax system with different tax rates on land before development, land after development and buildings. The remaining municipalities have a two-rate system with a uniform land tax and a building tax. A theoretical model of decisions by landowners suggests that the pre-development land tax ought to lead to faster development, but also the density of development may be affected. In the two-rate system land tax is neutral. The empirical results suggest that landowners respond to the tax incentives. Municipalities that adopted the three-rate property tax system saw an increase in single-family housing starts of roughly 12 percent.

Changes in Property Tax Progressivity for Florida Homeowners after the “Save Our Homes Amendment”

The “Save Our Homes Amendment” (SOHA) to Florida’s constitution limits annual increases in the taxable value of a homestead property to 3% or the rate of inflation (whichever is less) as long as the property is owned by the same owner. The amount of property value protected from taxation throughout the state by this amendment has grown to over $246 billion (13.9% of total property value) since the amendment’s implementation in 1995. This study tests whether the protection has accrued disproportionately over time among homestead property owners, the very group of people the amendment was intended to protect. The results suggest that the amendment has reduced the degree of progressivity in the state’s property tax system such that the owners of lower value home properties are shouldering an increasing proportion of the property tax burden relative to the owners of higher value homestead properties. The differential impacts of the SOHA across value ranges of homestead properties are likely attributable to differential appreciation and ownership transfers for higher and lower value homestead properties throughout the state.

Changes in Property Tax Progressivity for Florida Home owners after the "Save Our Homes Amendment"

The "Save Our Homes Amendment" (SOHA) to Florida'sconstitution limits annual increases in the taxable value of ahomestead property to 3% or the rate of inflation (whichever isless) as long as the property is owned by the same owner. Theamount of property value protected from taxation throughout thestate by this amendment has grown to over $246 billion (13.9%of total property value) since the amendment's implementationin 1995. This study tests whether the protection has accrueddisproportionately over time among homestead property owners,the very group of people the amendment was intended to protect.The results suggest that the amendment has reduced the degreeof progressivity in the state's property tax system such that theowners of lower value home properties are shouldering anincreasing proportion of the property tax burden relative to theowners of higher value homestead properties. The differentialimpacts of the SOHA across value ranges of homesteadproperties are likely attributable to differential appreciation andownership transfers for higher and lower value homesteadproperties throughout the state.

Property Tax in Urban China

AbstractThis paper examines China's urban housing sector and proposes that property tax reform be undertaken. Specifically, China should significantly reduce taxes on transactions and introduce property taxes during the possession of houses. This will increase housing affordability as a result of lower transaction costs, reduce speculation because of the higher opportunity cost of holding vacant houses, stabilize the fiscal system by generating more sustainable tax revenue, and improve the efficiency and fairness of the property tax system according to the principles of “ability‐to‐pay” and “user pays”.

Current developments in New Zealand local government

August 2007 saw the release of 'Funding Local Government', the report of the Local Government Rates Inquiry (available at www.ratesinquiry.govt.nz). New Zealand local government has one of the world's most flexible rating (property tax) systems. Councils may choose between capital value, land value or annual (rental) value. Rates may be levied primarily as an ad valorem charge but councils may also use a variety of fixed charges. In addition they may levy a targeted rate or rates, which may be either a fixed amount or ad valorem, charged on a single property or category of properties to recover the cost of a specific service or services. Councils also have the power, in consultation with their communities, to adopt highly flexible postponement policies allowing people to defer, indefinitely, payment of rates. (Normally when this is done, councils take a first charge on the property and recover interest at their marginal cost of borrowing.)

Governors Throw Out First Pitches — Will Legislatures Swing?

EARLY in January, governors began to throw out the first pitches of the season as they made their state-of-the-state addresses. Fiscal concerns took top billing in many states. Economic development proposals--many of which are tied closely to education systems--also were high on the list. But interest in such areas as early learning remained prominent as well. Here are some highlights. Early learning. Support for giving kids access to learning in the early years continues to grow. Alabama Gov. Bob Riley proposed investing an additional $20 million to triple the number of children who benefit from voluntary First Class pre-K, contending that such affordable access will fill a gap that has left working families with too few options. In Georgia, where the first alums of that state's subsidized pre-K program will enter college this fall, Gov. Sonny Perdue has proposed allocating an additional $6.4 million in lottery funds to bring the total number of slots in the program up to 79,000. New Mexico Gov. Bill Richardson wants to add 2,000 pre-K slots to his state's program, and Virginia Gov. Tim Kaine wants to increase the number of slots in his state's program from 13,000 to 20,000. Kansas Gov. Kathleen Sebelius wants to give more Kansas children a successful start in school by funding prenatal care and newborn screening, Parents as Teachers, Early Head Start, and high-quality child care. She also wants to fund all-day kindergarten. Career and technical. Hawaii Gov. Linda Lingle suggested her state should start Creative Academies, modeled after the successful STEM (science, technology, engineering, and math) academies, to focus on animation, digital media, game development, writing and publishing, and all the many talents of Hawaii's keiki. Maryland Gov. Martin O'Malley proposed that state leaders rededicate themselves to reducing the dropout rate with better career and technical programs in the high schools in every district where kids want them. Economic/work force development. Connecticut Gov. Jodi Rell proposed $300,000 for a loan reimbursement program for engineers who work in the state. She would also like to establish a Green Collar Jobs program at vocational and technical schools to train students in energy-efficient construction and retrofitting work. Georgia Gov. Perdue suggested investing $40 million to help commercialize research coming out of the state's universities in such areas as biosciences and medicine. Iowa Gov. Chet Culver wants to create a $5-million science, technology, engineering, and math center the University of Northern Iowa to help double the number of math and science teachers in order to make sure that every high school graduate will be ready for the jobs of the future. Gov. O'Malley of Maryland wants to develop science, technology, and public education in the state in order to combat climate change, improve conservation and energy efficiency, and make Maryland a leader in the development of renewable energy and green building techniques. Michigan Gov. Jennifer Granholm wants to reward colleges and universities when their students complete degrees, when they create opportunities for low-income students, and when they find ways to turn research ideas into businesses. Last year, Michigan launched the No Worker Left Behind initiative with the goal of giving 100,000 workers displaced by changes in the economy access to college education and other training to prepare them for specific high-demand jobs. Finance. Several governors are advocating changes to property tax systems. Connecticut Gov. Rell, for example, wants a property tax cap. South Dakota Gov. Mike Rounds is requesting major changes to a property tax system that is based on a system of agricultural assessments and appraisals that is no longer workable. Indiana Gov. Mitch Daniels' property tax relief proposals include adding a penny to the sales tax as the fairest way to make up the lost revenue. …

Area-Based Banding for Property Tax Assessment in Transitional Countries: An Empirical Investigation

This paper examines the potential applicability of an area banding approach in those situations where real estate data and other resources are scare. The purpose is to investigate the efficacy of property tax banding with respect to transitional countries, and to test this, a number of municipalities in Kosovo are used. The banding exercise is based on the actual floor area of the property. This will illustrate the potential application of banding properties within ‘area bands' as opposed to providing single point estimates of value. The paper also addresses important research questions that may have significant implications in the design of property tax systems within both transitional and developing countries.

Local Taxation and the Relationship between Incomes and Property Values

The authors' concern is with the relationship between household income and property value, within the context of the debate about the fairness of council tax—the property-based system of local taxation in England. Although located within this particular debate, the fundamental issue of the relationship between household income and property value is of relevance to systems of property taxation the world over. Although the empirical literature to date makes reference to the links between property values and income levels in the context of debates about the fairness of council tax, the relationship between the two has not been empirically tested. The authors provide evidence of this relationship and show that, although there is a strong positive relationship between property values and income amongst higher income households, there is evidence of a ‘U-shaped’ relationship among lower income households. In addition, there is very strong evidence, that the elasticity of property prices with respect to income is not constant, but follows a bell-shaped distribution which is skewed to the right.

Housing Tenure and Mobility with an Acquisition-Based Property Tax: The Case of Florida

The purpose of this study is to empirically examine the effect on ownership tenure for residential housing under an acquisition-based property tax system. The state of Florida has an acquisition-based property tax system whereby annual assessments are capped to protect existing homeowners; the assessment is only adjusted to reflect market value upon resale. We hypothesize that such a system would lengthen the average tenure of residential home ownership, since the transactions costs of intra-state moves are magnified by the lost property subsidy. A sample of 20 Florida counties is used to examine average and median residential housing tenure at two distinct points in time to investigate changes in housing tenure. The results do not support the hypothesis. Possible mitigating factors included increased residential housing demand from a large population influx, escalating residential property values, low interest rates and easy credit availability, and homeowners adjusting to the acquisition-based property tax system.

Does Home Rule Overrule the State`s Role? An Analysis of Property Tax Administration in New York State

This essay analyzes the property tax system in New York State. Based on historical and comparative analyses of three critical factors in property tax administration-assessment standards, revaluation, and assessing units-this study reveals that the current property tax administration structure has deep roots in the "home rule" tradition in New York State, making it hard to achieve intradistrict equity in property tax burden for some assessing units. The study concludes that the state's lack of active role undermines public faith in the property tax system and in local governments. The state should not be overruled by the local government politics based on home rule.

Lessons for Economic Reform Based on Pennsylvania’s Experiences with the Two‐Tiered Property Tax

Abstract. Although economic theory indicates that the imposition of a two‐tiered property tax system facilitates urban revitalization, localities in most states have not been authorized to institute a two‐tiered property tax. The authority to implement such a tax is partially determined by a state constitution’s uniformity and equal protection clauses and tax rate ceilings. An analysis of these provisions reveals 23 states may establish a two‐tiered tax, but implementation in 20 of the states must await the passage of state‐enabling legislation. Because of the dearth of experience in enacting legislation and the absence of literature that provides guidance for securing its passage, the politics of enacting Pennsylvania’s 1998 statute are assessed. The case study clearly indicates that enabling legislation enjoys bipartisan support as well as the backing of urban and rural representatives. However, the legislation’s fate is primarily determined by the composition of local electorates and the political power of farm lobbies.