Property Tax Threatens the Longevity of Homeownership in America

Terrill 1
Property Tax Threatens the Longevity of Homeownership in America
Ashley Terrill
University of Massachusetts Dartmouth
Spring 2019: Statistical Analysis
April 25, 2019

Terrill 2
Introduction
In municipal finance, property tax is considered as the backbone. In a number of
developed countries, now property taxation faces some major implementation issues such as
distinguishing taxable properties, determining a suitable tax base, fixing up a proper assessment
system, and stabilizing accurate property tax rates (Brownlee, 2016). The purpose of this
research paper is to achieve deep understanding of the functional working of property tax
legislation. The study also highlights variables in the property tax context among different
players: the tax authority, the developers, the local authorities, the taxpayers, and the central/state
government.
Site value tax rates can only generate analogous revenues at very high rates of tax. This
implies that more revenue can be generated from site value task only if the rate of taxation is
high. This is a problem as bigger rates create higher distortions while estimating the amount of
revenues to be collected since higher rates will exaggerate the country’s GDP. As per political
perspectives, it is possible to levy a cheaper property tax rate on land/improvements than a
greater tax rate on the land portion only (Rose & Karran, 2018). The property tax was of 3.12
percent in the average of the national income in the year of 2004. The amount of property tax in
the 1970s was the same as the recent statistics. The average property tax was 3.5 percent in that
time. The property tax was above the average level in the year of 1980s only.

Terrill 3
In most advanced countries, the property tax performs a vital role in the local
government. In Australia, Canada, and the USA it is the principal root of Municipalities revenue
(Hornbeck & Keniston, 2017). Approximately half of the total federal revenues in Canada are
acquired from property taxes. Due to the wealth augmentation of these taxes, the local
government has continually increased these tax rates on per capita basis, from $ 864 dollar in
1988 to $ 1, 035 in 2007in Canada. This is the major problem towards the taxpayers as a
taxpayer will resist any increase particularly when they feel the addition is not sustained by an
extension in the provision of services. Usually, the value of the properties in the market will turn
in an irregular way. Oates & Fischel (2016) justified that the cost of the property is increasing
rapidly. The long-term trend is not observed from the recent trend of upwards in property tax
collection compared to income (Pogge & Mehta, 2016).
How new tax collection process and procedures do exaggerates the property tax changes
and their effect on citizen services and creating lengthy injustice, resulting in the fall of home
ownership in America? The policymakers of local government have not had the capacity to bring
down property rates as much as they may have wanted as property estimations rose and salaries
declined amid the financial downturn since they confronted underfunded orders from the national
government and diminished state help. For instance, the expense to states and regions of
underfunded government orders surpasses the aggregate sum of property charge increments in
the course of recent years. All out-property charge accumulations expanded by $67 billion from
2000 to 2004, while unfunded orders to state and nearby governments cost $73 billion from the
financial year 2002 through the monetary year 2005 (Wanless, 2018).

Terrill 4
Literature Review:
In Massachusetts, the evaluated estimation of a property is called an appraisal. The
property charge depends on the estimation of the property. This is now and again called
"advertisement valorem," a Latin expression that signifies to the value.
The City of Boston works under a property charge grouping framework. This enables
government to charge diverse rates for private and business property. The expense rate is the sum
a citizen owes for every one thousand dollars of property estimation in a given year. The duty
rate for a given financial year shows up on your second from last quarter charge, which is
ordinarily issued in late December.
According to residential Property Tax Exemption, the city of Boston offers a yearly
Residential Property charge exception to mortgage holders who use their property as their
essential habitation. This private exclusion lessens the expense bill by exempting a segment of
the property estimation from tax collection (per $1,000 in surveyed esteem). Last year, the
private exception spares qualified Boston mortgage holders up to $2,538.47 on their expense bill.
For Fiscal Year 2018, the residential property tax exemption requires the citizens of Boston to
adhere to the following requirements;
1. The citizen of Boston needs claimed and lived in their home as their own main
living place on January 1 proceeding the current monetary year. For instance, for
in any event the most recent year, the citizen need possessed and involved their
property as their main living place on January 1, 2017, to be qualified for
exclusion in the Fiscal Year 2018 (July 1, 2017, to June 30, 2018).