Taxable Value Research Articles

Property tax‐induced mobility and redistribution: Evidence from mass reappraisals

AbstractI investigate the effect of property tax changes on homeowner mobility and voted tax rates using a panel of assessment and sales records in Ohio. I use redistributive mass reappraisals that cause changes in an individual's tax price of local services to examine how changes in homeowner's tax bills influence mobility. I find that a $0.10 increase in the price per dollar of services leads to a 5% increase in the likelihood of sale with no change in foreclosure probability. I also find suggestive evidence of increased voted tax rates when the ratio of median to mean taxable value decreases.

Impact Analysis of the Law on Diminishing Returns on the Mass Appraisal of Real Estate in the Republic of Moldova

The present study investigates the shortcomings of the linear models of massive evaluation of real estate in the Republic of Moldova, currently used to determine the taxable value, the author noting, in particular, the influence of the distortion of the calculated values, within the mathematical modeling and the need to respect the law of diminishing returns. The challenges are relevant for countries with an ad-valorem taxation system, such as the Republic of Moldova, which needs to harmonize its national legislation with the criteria for joining the European Union. The study uses the system of mass evaluation of real estate properties in order to identify and develop optimization solutions for the massive evaluation system of real estate properties, in order to tax them, by implementing log-linear models, with effective results compared to existing linear regressions. By benchmarking performance metrics between linear regressions from existing and refined models, the research improves the taxation system through more accurate methodologies.

The Impact of Renewable Energy Tax Incentives on Electricity Pricing in Texas

Texas has abundant natural resources, making it a good place for renewable energy facilities to build. Unfortunately, property taxes are the highest tax on an incoming renewable energy facility in the state. In order to increase renewable energy in the state, Texas tax code Chapter 313 was introduced. Chapter 313 allows school districts the opportunity to offer a 10-year limit, ranging from USD 10 million to USD 100 million, on the taxable value of a new green energy project. With Chapter 313 ending in 2022, the following question is raised: how do tax incentives that increase the number of applications for producing renewable energy in Texas impact the wholesale, real-time pricing of electricity in the state? Skew-t regression models were implemented on a large dataset, focusing on the designated North, Houston, and West regions of the Electricity Reliability Council of Texas (ERCOT), since these regions account for 80% of the state’s energy consumption. Analysis focused on the hours ending at 3 AM, 11 AM, and 4 PM, due to the ERCOT’s time-of-day pricing. Three key findings related to the above question resulted. First, tax incentives that increase the number of active wind and solar facilities lead to a statistically significant (p < 0.0001) reduction in wholesale electricity price (USD/MWh), ranging between 2.31% and 6.6% across the ERCOT during different hours of the day. Second, for a 10% increase in tax-incentivized green energy generation, during a 24-hour period, there is a statistically significant (p < 0.0001) reduction in the generation cost (USD/MWh), ranging between 0.82% and 1.96%. Finally, electricity price reductions from solar energy are much lower than those from wind generation and/or are not statistically significant.

The Impact of State Fiscal Preemption on Local Taxing Authorities: A Case of Michigan

This study investigates the impact of state fiscal preemption on local governance structure. Specifically, it focuses on state-imposed tax and expenditure limits (TELs), which constrain local governments’ ability to raise property tax revenues. Using a unique data set on millage rates levied by all local governments in Michigan from 2011 to 2017, the study examines how the state-imposed limitation on local property taxable values affects local taxing efforts. The findings show that the assessment limit results in higher taxing power by cities and special districts. It also indicates local residents’ preferences to be drivers for the greater taxing efforts.

Summaries of Articles

Summaries of Articles

An exploration of structural determinants driving racial disparities in COVID-19 deaths in Michigan.

Racial disparities in COVID-19 death rates have largely been driven by structural racism in health, housing, and labor systems that place Black, Brown, and Indigenous populations at greater risk for COVID-19 exposure, transmission, and severe illness, compared to non-Hispanic White populations. Here we examine the association between taxable property values per capita, an indicator influenced by historical and contemporary housing policies that have disproportionately impacted people of color, and COVID-19 deaths. Taxable values serve as a proxy for fiscal health providing insight on the county's ability to address imminent needs, including COVID-19 responses. Therefore, higher taxable values indicate local governments that are better equipped to deliver these public services. We used county-level data from the American Community Survey, the Michigan Community Financial Dashboard, The Atlantic's COVID Tracking Project, and the Community Health Rankings and Roadmap for this cross-sectional study. Maps were created to examine the geographic distribution of cumulative death rates and taxable values per capita, and regression models were used to examine the association between the two while controlling for population density, age, education, race, income, obesity, diabetes, and smoking rates. Seventy-five counties were included. The mean taxable value per capita was $43,764.50 and the mean cumulative death rate was 171.86. Findings from the regression analysis showed that counties with higher taxable values were associated with lower COVID-19 death rates (B = -2.45, P < 0.001). Our findings reveal a need to reevaluate current policies surrounding taxable property values in the state of Michigan, not solely for theirinequitable impact on local governments' financial solvency and service quality, but also for their negativeconsequences for population health andracial health equity. The online version contains supplementary material available at 10.1007/s10389-022-01817-w.

Michigan’s Swamplands and Michigan Agricultural College: Paul M. Harmer’s Career and Legacy in Muck Soils Research on the Corey Marsh

Michigan’s Swamplands and Michigan Agricultural College: Paul M. Harmer’s Career and Legacy in Muck Soils Research on the Corey Marsh David E. Wright (bio), Patricia E. Norris (bio), and Jennifer C. Owen (bio) In January 1945, the Michigan State College Record ran an article, “Muck Yields Wealth,” about the Michigan State College (MSC) Muck Soils Research Farm on the Corey Marsh, located in Bath Township, twelve miles northeast of Lansing. Ten years earlier, the article claimed, the 200-acre plot had been “considered virtually worthless,” but by 1945, it was “worth millions of dollars to Michigan’s muck land farmers in the wealth of experimental findings it is spawning.”1 The Muck Soils Research Farm was located on a parcel that was part of the swampland acreage transferred to Michigan ownership by the federal government through the Swamp and Overflowed Lands Act of 1850, which was later given to Michigan’s fledgling agricultural college. At the time of its passage, proponents of the 1850 law echoed the view that “worthless” swampland might be redeemed through drainage and reclamation. According to the Congressional Globe, “the passage of this bill and the donation of these scraps of land, injurious as they exist to the States, and utterly valueless to this Government, is but the beginning of the work of reclamation; the State Legislatures must follow, appropriate money, and redeem them from the water—and the sooner the better for the health of the people and the prosperity of the country.”2 The benefits of draining swamplands were further described in a 1907 federal bulletin that provided an inventory of swamplands deeded to the states and a description of the feasibility of reclaiming the lands for productive use. [End Page 91] Swamplands, when drained, are extremely fertile, requiring but little commercial fertilizer, and yield abundant crops. They are adapted to the growth of a wide range of products and in most instances are convenient to good markets. While an income of $15 to $20 per acre in the grain-producing States of the Middle West is considered profitable, much of the swamp lands in the East and South would, if cultivated in cabbage, onions, celery, tomatoes, and other vegetables, yield a net income of more than $100 per acre. In addition to the immediate benefits that accrue from the increased productiveness of these lands, a greater and more lasting benefit would follow their reclamation. The taxable value of the Commonwealth would be permanently increased, the healthfulness of the community would be improved, mosquitoes and malaria would be banished, and the construction of good roads made possible. Factories, churches, and schools would open up, and instead of active young farmers from the Mississippi Valley emigrating to Canada to seek cheap lands they could find better homes within our own borders.3 The land on which the MSC Muck Soils Research Farm was located was unused by the college until Michigan’s Muck Farmers Association pressed MSC to expand agricultural research on muck soils. The college responded by creating the Muck Soils Research Farm in 1941. Paul M. Harmer, MSC muck soils specialist, was the first director of the farm. By 1945, the Record reported the muck farm was producing “1,000 bushels an acre in onions, and fantastic yields of mint, spinach, lettuce, dill, carrots, parsnips, cabbage, and other crops. Experimental findings by Dr. Harmer have enabled the state’s muck farmers to convert many acres of mediocre land into high producing soil.”4 In 2012, Michigan State University (MSU)—formerly MSC— closed the Muck Soils Research Farm because of financial and hydrological challenges that made continuing research there problematic. The land—the only state land grant to MSU that has remained in continuous ownership of the university—is now the MSU Corey Marsh Ecological Research Center (CMERC). Changing social views about the value of swamplands in their natural state are reflected in plans for CMERC. As the vision for the CMERC evolves, exploring the history of the land and its use figures prominently into plans for ecological restoration [End Page 92] on the site; studying that history has uncovered the legacies of Paul Harmer, his Department of Soil Science at MSU...

Designing a Valuation System for Property Tax: The Case of Zanzibar, Tanzania

In most African countries, property taxes fail to efficiently generate sufficient revenue to provide adequate local services. One of the crucial reasons for this is that market values are not reflected in the taxable value because of a lack of property transaction market data. When market data are inaccessible, buildings are evaluated using the replacement cost method, which does not reflect locational values. In this study, we examine methods to improve the valuation system using the case of Zanzibar, Tanzania. We recommend the simple and systematic mass assessment model, with details that can be used to derive locational values for all taxable buildings and improvements. In this model, (1) the taxable areas are divided into sub-regions based on land value stratification, (2) land value ranges are set for each sub-region, (3) land value determinants are identified, and (4) land price ratio tables for the identified land value determinants are created. In this assessment method, individual valuers play an essential role in capturing locational values because their knowledge and experience are helpful in dividing the area targeted for property tax assessment into several regions, thereby reducing the intraregional variance in land values. Improving the valuation system is one of the key factors in determining the importance of property tax as a revenue generator in developing countries.

Summaries of Articles

Summaries of Articles

The Intersectionality of Educating Black Students in Michigan: Public School Finance, Racial Segregation, and Housing Policy

This research applies critical race theory to investigate Michigan’s system for funding public schools, focusing on structural racism and discrimination embedded in education finance laws, housing policies, and residential and educational segregation. We find that the average Black student receiving free or reduced-price lunch (FRL) receives $411 less per pupil per year than the average White student receiving FRL and $783 less than the average White student who does not receive FRL. These disparities stem entirely from differences in locally sourced district revenues that are the result of vast differences in Black-White property wealth. On average, a one-percentage-point increase in a district’s proportion of Black students receiving FRL is associated with a $2,354 decrease in taxable value of property per pupil. Our analyses imply that a district enrolling 1,000 Black and FRL students would receive $1,364,000 less annually than an identically sized district with no Black or FRL students. This funding is sufficient to hire 21 additional teachers or to improve salaries, a proven method of improving the number and quality of applicants and retaining quality instructors. Through its continued reliance on local property taxation, the school finance system in Michigan is yet another example of how laws and policies reinforce structural racism and discrimination against Black students. Along with the research literature showing racism’s historical and continuing impacts on Black-White property wealth disparities, this study discerns a self-reinforcing system that relegates Blacks to a subordinate socioeconomic status regarding school finance, segregation and housing policy, and discrimination.

A Critical Assessment of the Originalist Case Against Administrative Regulatory Power: New Evidence from the Federal Tax on Private Real Estate in the 1790s

The Supreme Court is poised to toughen the nondelegation doctrine to strike down acts of Congress that give broad discretion to administrators, signaling a potential revolution in the separation of powers. A majority of the Justices have suggested in recent opinions that they are open to the far-reaching theory that all agency rulemaking is unconstitutional insofar as it coerces private parties and is not about foreign affairs. If adopted, this theory would invalidate most of the federal regulatory state. Jurists and scholars critical of rulemaking’s constitutionality base their claims on the original meaning of the Constitution. But these critics face a serious obstacle: early Congresses enacted several broad delegations of administrative rulemaking authority. The critics’ main response has been that these early statutes do not count, because they fall into two areas in which (say the critics) the original nondelegation doctrine did not apply, or applied only weakly: noncoercive legislation (e.g., giving benefits) or foreign-affairs legislation. This Article finds that the originalist critics of rulemaking are mistaken to say that no early congressional grant of rulemaking power was coercive and domestic. There is a major counterexample missed by the literature on nondelegation, indeed by all of legal scholarship, and not discussed more than briefly even by historians: the rulemaking power under the “direct tax” of 1798. In that legislation, Congress apportioned a federal tax quota to the people of each state, to be paid predominantly by owners of real estate in proportion to their properties’ respective values. Thousands of federal assessors assigned taxable values to literally every house and farm in every state of the Union, deciding what each was “worth in money”—a standard that the legislation did not define. Because assessors in different parts of a state could differ greatly in how they did valuation, Congress established within each state a federal board of tax commissioners with the power to divide the state into districts and to raise or lower the assessors’ valuations of all real estate in any district by any proportion “as shall appear to be just and equitable”—a phrase undefined in the statute and not a term of art. The federal boards’ power to revise valuations en masse in each intrastate tax district is identical to the fact pattern in the leading Supreme Court precedent defining rulemaking. Thus, each federal board in 1798 controlled, by rule, the distribution of the federal real-estate tax burden within the state it covered. This Article is the first study of the federal boards’ mass-revision power. It establishes that the mass revisions (a) were often aggressive, as when the federal board in Maryland raised the taxable value of all houses in Baltimore, then the nation’s third-largest city, by 100 percent; (b) involved much discretion, given serious data limitations and the absence of any consensus method; (c) had a major political aspect, as the federal boards were inheriting the contentious land-tax politics that had previously raged within the state legislatures, pitting the typical state’s rich commercial coast against its poor inland farms; (d) were not subject to judicial review; and (e) were accepted as constitutional by the Federalist majority and Jeffersonian opposition in 1798 and also by the Jeffersonians when they later took over, indicating the boards’ power was consistent with original meaning or, alternatively, with the Constitution’s liquidated meaning. In short, vesting administrators with discretionary power to make politically charged rules domestically affecting private rights was not alien to the first generation of lawmakers who put the Constitution into practice. More broadly, this Article is the first in-depth treatment of the 1798 direct tax’s administration. It shows that the tax, measured by personnel, was the largest federal administrative endeavor, outside the military, of the Constitution’s first two decades. It is remarkable that today’s passionate debate on whether the administrative regulatory state violates the Framers’ Constitution has so far made no reckoning with this endeavor. (This Article’s dataset is available at: https://doi.org/10.7910/DVN/IGMJ7E.)

Theoretical and Practical Study on the Establishment of the Taxable Value of Buildings Belonging to Legal Entities

Abstract GEV 500 represents the International Standard regulating the establishment of the taxable value of buildings belonging to legal entities. In order to establish the taxable value of buildings, legal entities must appeal either to authorized persons specialized in real estate valuation (EPI) or to a corporate member, in which case the assessment report for taxation purposes can be made by one or more evaluators with EPI specialization.Our study aims at theoretical substantiation and practical evaluation for the purpose of taxing of an office apartment through the market approach, using quantitative methods. To this end, the value of the asset was determined in an appropriate manner in full consonance for the purpose of valuation by applying the market comparison method, using the comparison criteria that are specified in the case of building assets in the price per square meter and the income method, which takes the shape of an assumed or hypothetical rent that is determined on the basis of the cost that would be borne by the landlord to rent an equivalent space. The available data, information and delimitations have allowed, on the one hand, selection of the appropriate methods and, on the other hand, formulation of the opinion on the value.

Tax Rules of Buildings from Craiova in 2019

Taxes have a mandatory character, they are paid in money form by taxable subjects (natural, legal persons and entities without legal personality) for the realized income, the provision of services and the goods they own. Taxes can be collected using several methods: stop at source (the tax is transferred to the state budget by a third person); the method of applying and canceling mobile tax stamps; offsetting the amounts paid in addition; the method of claiming compensation for legal facilities; contesting the revenues illegally collected. According to the Decision no.533 / 2018 adopted by the Local Council of Craiova, for residential buildings and annex buildings owned by natural persons, the tax rate on buildings is 0.08% on the taxable value of the building. For non-residential buildings owned by natural persons, the tax rate is 0.4% applied to the taxable value of the building. In the case of buildings owned by legal entities, the tax rate on buildings for residential ones is 0.2%, and for non-residential ones 1.3% on the taxable value of the building. Also, tax exemptions were granted for the following categories of buildings: buildings which, according to the law, are considered historical, architectural or archaeological monuments, except for the rooms that are used for economic activities; buildings used for the provision of social services by non-governmental organizations and social enterprises as providers of social services; buildings used by non-profit organizations, used exclusively for non-profit activities, etc.

Rental Value of a Local Government Asset Using Asymmetric Valuation

This study tried to identified the market and the rental value of Grha Z as one of the local assets in Province A. This study used cost approach and income approach in valuation to obtain rental value and Net Present Value (NPV) of the building, the construction cost of a new Grha Z building, management office, home generator, and warehouse. Because of the limited information, this study valuates the asset asymmetrically. The result of the calculation produces the value of assets, taxable value assets as the basis for calculating the value of the rental assets according to Minister of Finance (MoF) Regulation 33/2012. The results showed that the rental value of local assets such as land and buildings in the area Grha Z can be increased by Regulation of Indonesian MoF Number 33/2012. It can be used as a material consideration in the improvement of regional asset rental agreement. Keywords : rental value, income approach, cost approach, local asset (1) Fakultas Ekonomika dan Bisnis Magister Ekonomika Pembangunan, Universitas Gadjah Mada, Indonesia (2) Fakultas Ekonomika dan Bisnis, Universitas Gadjah Mada, Indonesia (3) Fakultas Ekonomi dan Bisnis, Universitas Ahmad Dahlan Yogyakarta, Indonesia (4) Fakultas Ekonomi, Universitas Negeri Malang, Indonesia * Corresponding Author https://doi.org/10.21632/irjbs.12.1.31-39

Tuition Single Classification using Decision Tree Method and C4.5

Tuition Single (UKT in Indonesia) is an operational cost measurement standard for universities in Indonesia which is applied by the government since 2013. This standard is enforced for every public university students who pass entrance university test. The problem with this standard is still found that there are students with tuition single category which does not fit with their condition, thus resulting in the incriminating of students with difficult economic situations. The usage of the decision tree and C4.5 algorithm for classification is able to process continuous data and build model efficiently with a large number of data. The input variables for tuition single classification are the income of the financier, the status of the children within the family, the taxable value of land and building, and the ownership of the vehicle. This work uses a multiclass variable. The output variables are group 1 to group 7. The accuracy of the system is 80.25% where the groups with the most students are group 3 and group 7. The decision tree built is also quite big considering the number of the variables and the variation of data used in each variable.

Residential taxable value recovery in coastal Mississippi after Hurricane Katrina

ABSTRACTThe resilience of local fiscal resources is an important missing component of community recovery after disasters. We know little about how quickly or fairly broad-based taxable economic activities return to pre-disaster levels. For example, property tax revenue, typically heavily dependent on residential properties, is commonly the largest source of General Fund revenue for local governments in the United States. Because residential properties are frequently impacted by natural hazards, understanding the linkage between housing and fiscal resilience is critical. Yet there exist very few broad-based studies of housing recovery. This paper helps fill that gap by evaluating housing recovery in a coastal portion of the U.S. state of Mississippi after Hurricane Katrina. We find that while the influence on housing values of Hurricane Katrina’s flood and wind damage dwindled over time, race and income remained salient factors in the level of recovery of single-family homes and their taxable values.

Menjadikan Pemilik Tanah Sebagai Pemegang Saham Perusahaan, Sebagai Alternatif Pembebasan Tanah Masyarakat

This study aims to produce a model of the transfer of control of land without any permanent transfer of land rights. Basic theory used is the stakeholder theory and combined with agency theory. At this time, the company issues in land acquisition is a problem that was never completed. Companies require mastery of the land to increase production and increase investment. Problems arise if the property is controlled by a corporation that wants to belong to the community. The Company typically acquires land by following standard procedures. Starting from the issue of legality to the pricing of land acquisition, while the community determines the price of land acquisition by using market prices. The problem is further complicated when people use the market price, but not based on the calculation of appraisal, but based on rumors or general discussions in the community. So that the area acquisition price is higher than taxable value. The model determined by making the owner of the land as one of the shareholders in the capital structure of the company, or the firm appoints affiliated companies. With this model, the public ownership of the land or the landowner has not changed, and the company can use the desired area without a lot of money and time spent for land acquisition.

Changes in the Benefits of the Taxable Value Cap When Property Values are Decreasing: Evidence from Michigan

We evaluate the changes in the benefits of the taxable value cap in the property tax in Michigan, stemming from decreases in real-estate values. We find a substantial increase in the dispersion of benefits. Comparing results for 2012 with results for 2008, we find that the tax savings for long-time homeowners were reduced in areas with low and medium rates of population growth, but that the benefits increased by 60% in high-growth areas. We also find that, in areas that experienced greater price appreciation before Michigan's housing-price decline than depreciation during the decline, long-time homeowners experienced reductions in their effective property-tax rates of 1.08 mills for each year of ownership. However, long-time homeowners in areas with pre-crisis appreciation that was substantially smaller than the subsequent depreciation actually experienced higher effective tax rates, relative to new homeowners. Finally, we explore the non-linearity of our results, comparing “older” and “newer” homeowners (i.e., those purchasing their property before or during the housing-market decline). the benefits nearly double for long-time homeowners with the exclusion of newer homeowners, with newer homeowners contributing to the higher effective tax rates. These findings are the result of inaccurate assessments, particularly overassessments, experienced by those purchasing their property during the housing-market decline.

The Reflection of Data-Driven Value Creation in the 2018 OECD and EU Proposals

Is the current corporate tax system fit for the digitalized economy? The 2018 interim report of the OECD and the proposals of the European Commission on the introduction of significant digital presence and a digital services tax give new insights into policymakers’ perception of ‘value creation’ and income generation in digitalized business models. Although the right way to tax digitalized business models seems disputed with regard to the diverging outcomes of the OECD’s and European Commission’s work so far, it seems to be of common understanding that user data are susceptible of establishing a taxable nexus. In a first step, this article aims at analysing how the collection and processing of user data may create such genuine link between an income generating activity and a state territory enabling this state to exercise its taxing right. In that respect, the concept of value creation, a driving concept in the discussion on how to tax digitalized businesses, is critically reviewed and an attempt to understand its real meaning is presented. In a second step, the article analyses to which extent the long- and short-term proposals of the European Commission reflect such data-driven (taxable) value creation, critically highlighting their main characteristics and flaws.

Global and Geographically Weighted Quantile Regression for Modeling the Incident Rate of Children's Lead Poisoning in Syracuse, NY, USA.

Objective: The purpose of this study was to explore the full distribution of children’s lead poisoning and identify “high risk” locations or areas in the neighborhood of the inner city of Syracuse (NY, USA), using quantile regression models. Methods: Global quantile regression (QR) and geographically weighted quantile regression (GWQR) were applied to model the relationships between children’s lead poisoning and three environmental factors at different quantiles (25th, 50th, 75th, and 90th). The response variable was the incident rate of children’s blood lead level ≥ 5 µg/dL in each census block, and the three predictor variables included building year, town taxable values, and soil lead concentration. Results: At each quantile, the regression coefficients of both global QR and GWQR models were (1) negative for both building year and town taxable values, indicating that the incident rate of children lead poisoning reduced with newer buildings and/or higher taxable values of the houses; and (2) positive for the soil lead concentration, implying that higher soil lead concentration around the house may cause higher risks of children’s lead poisoning. Further, these negative or positive relationships between children’s lead poisoning and three environmental factors became stronger for larger quantiles (i.e., higher risks). Conclusions: The GWQR models enabled us to explore the full distribution of children’s lead poisoning and identify “high risk” locations or areas in the neighborhood of the inner city of Syracuse, which would provide useful information to assist the government agencies to make better decisions on where and what the lead hazard treatment should focus on.