The city’s main way to get money from you and me is property taxes, and there are 2 things that affect the property taxes that we pay every year: the assessed value or assessment of our house, and the property tax rate. (Counties collect property taxes as well, but also enjoy piggyback income taxes.)
The Policy Question
So do we change the rate or the cap on assessed value if we want to affect tax policy? I recently spoke with Bob Burdon, who is the commander-in-chief of the Annapolis/Anne Arundel County Chamber of Commerce. He has argued over the years that we should focus on the rate, because that is what determines how much we have to pay. He is at least partially right—whether assessments increase by 10% or 2% per year, if the rate is high, at some point we are going to have to pay the piper.
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But I am not convinced that we should spend all of our efforts focusing on the rate alone. And the main reason is that I just don’t trust politicians enough.
When assessments rise by 10% every year, property tax rates go down, but they rarely go down to the constant yield rate. So, we are paying more in property taxes. And have you every been formally notified by the government? Have you been invited to any hearings as required by law? Have these hearings even occurred?
Politicians can make the claim that taxes went down under their stewardship, because the rates go down according to constant yield principles. But we are paying more! If the increased assessed value was capped at 2% or 4%, the politicians would have to focus more on the rate if they wanted to raise taxes, and it will be easier for people like us to see what is going on.
This is slightly boring and confusing, even for a person with a high dork quotient like myself. But it is very important. My points are this:
-Don’t believe anyone who tells you that your property taxes are going down.
-10% increases in assessments are too much.
-We should focus on the rate AND the increase in assessed value.