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Questions and Answers
An assessment system in which fractional ratios are applied to appraised values.
An assessment system in which fractional ratios are applied to appraised values.
- Hybrid system
- Current market value
- Acquisition value
- Classification (correct)
- Uniform appraisal model
- Equalization rate
A valuation system in which adjustments to market value occur mostly upon the sale of the property.
A valuation system in which adjustments to market value occur mostly upon the sale of the property.
- Rate-driven
- Market indexed
- Fair market override
- Classification
- Acquisition value (correct)
- Budget-driven
The value concept that captures the dynamic changes in underlying property wealth.
The value concept that captures the dynamic changes in underlying property wealth.
- Acquisition value
- Equalized base value
- Fractional ratio value
- Historical adjusted value
- Current market value (correct)
- Rate-influenced valuation
A system in which the property tax rate "floats" up or down to adjust to district revenue needs.
A system in which the property tax rate "floats" up or down to adjust to district revenue needs.
A system that tends to generate more property tax revenue when assessed values increase and less when values decrease.
A system that tends to generate more property tax revenue when assessed values increase and less when values decrease.
A system which may allow taxing districts to limit property tax rates or budget increases.
A system which may allow taxing districts to limit property tax rates or budget increases.
What valuation practice creates the greatest distortion in horizontal equity?
What valuation practice creates the greatest distortion in horizontal equity?
List the five contributing elements to property tax systems.
A. Laws, Budgets, Property Classes, GIS Maps, Ratios
B. People, Policies, Processes, Technologies, Data
C. Appraisers, Codes, Valuation Tables, Audits, Exemptions
D. Revenues, Markets, Forecasts, Inspectors, Expenditure
List the five contributing elements to property tax systems. A. Laws, Budgets, Property Classes, GIS Maps, Ratios B. People, Policies, Processes, Technologies, Data C. Appraisers, Codes, Valuation Tables, Audits, Exemptions D. Revenues, Markets, Forecasts, Inspectors, Expenditure
What is the main function of the control administrative component of a property tax system?
What is the main function of the control administrative component of a property tax system?
A key advantage of budget-driven property tax systems is that there is clear delineation between ____ and ____ responsibilities.
A key advantage of budget-driven property tax systems is that there is clear delineation between ____ and ____ responsibilities.
Rate-driven systems should be discouraged because they legitimize taxpayer misconceptions that ____ will raise their property tax and that the ____ controls both the amount and distribution of the property tax.
Rate-driven systems should be discouraged because they legitimize taxpayer misconceptions that ____ will raise their property tax and that the ____ controls both the amount and distribution of the property tax.
Systematic undervaluation of certain properties/property classes results in a ____ and results in undesirable hidden tax shifts.
Systematic undervaluation of certain properties/property classes results in a ____ and results in undesirable hidden tax shifts.
Targeting property tax relief to those with highest need makes ____ more cost-effective than broad exemptions.
Targeting property tax relief to those with highest need makes ____ more cost-effective than broad exemptions.
A best practice to minimize negative effects of exemptions is to ensure they are written ____ and ____ and that they are construed ____.
A best practice to minimize negative effects of exemptions is to ensure they are written ____ and ____ and that they are construed ____.
A key argument against business property tax incentives is that they violate the ____ criteria for a good tax by benefiting business newcomers at the expense of existing competitors.
A key argument against business property tax incentives is that they violate the ____ criteria for a good tax by benefiting business newcomers at the expense of existing competitors.
Flashcards
Classification (Assessment)
Classification (Assessment)
An assessment system applying fractional ratios to appraised values, setting different percentages for property types.
Acquisition Value System
Acquisition Value System
Valuation system where market value adjustments mainly occur upon property sale, restricting increases until then.
Current Market Value
Current Market Value
The value concept that reflects current market conditions, responding to supply, demand, and economic shifts.
Rate-Driven System
Rate-Driven System
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Budget-Driven System
Budget-Driven System
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Hybrid System (Tax)
Hybrid System (Tax)
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Systematic Undervaluation
Systematic Undervaluation
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Elements of Tax Systems
Elements of Tax Systems
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Control Component Function
Control Component Function
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Budget-Driven Advantage
Budget-Driven Advantage
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Rate-driven problems
Rate-driven problems
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De facto exemption
De facto exemption
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Circuit breakers
Circuit breakers
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Best Exemption Practices
Best Exemption Practices
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Tax neutrality
Tax neutrality
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Study Notes
- Property tax systems are examined
Assessment System with Fractional Ratios
- An assessment system using fractional ratios applied to appraised values is a classification system
- In classification systems varying property types are assessed at different percentages of their appraised values via fractional ratios
- Fractional ratios are often set by law or policy
Valuation System Adjusting to Market Value
- A valuation system where adjustments to market value mainly happen when the property is sold is an acquisition value system
- An acquisition value system resets a property's assessed value only upon sale; increases get restricted until the sale
Value Concept Reflecting Property Wealth Changes
- Current market value reflects actual market conditions, adapting to shifts in supply, demand, and economic factors
System Adjusting to District Revenue Needs
- In rate-driven systems, tax rates fluctuate based on the district's monetary needs, regardless of property value changes
System Generating Property Tax Revenue
- Budget-driven systems tend to generate more property tax revenue when assessed values increase and less when values decrease
- In budget-driven systems, local governments first determine their budget and the total collected revenue depends on the assessment base
System Limiting Property Tax Rates/Budget Increases
- A hybrid system is a system that may allow taxing districts to limit property tax rates or budget increases
- Hybrid systems combine aspects of rate- and budget-driven systems, often including limits or caps on annual revenue or rate increases
Horizontal Equity Distortion
- Systematic undervaluation of certain properties or classes causes the greatest distortion in horizontal equity
- Systematically undervaluing certain classes can lead to unfair tax burdens among similar properties
Elements of Property Tax Systems
- The 5 key elements of property tax systems include legal framework, administrative structure, property tax base, revenue structure, and taxpayer participation
- These elements define the laws, structure, base, revenue process, and public involvement of a property tax system
Control Administrative Component
- The main function of the control administrative component of a property tax system is to assign powers/responsibilities, provide resources, and govern their use
- The control component defines roles and resource management within the system
Budget-Driven Property Tax Systems
- In budget-driven property tax systems, a key advantage is the clear separation of assessment and taxation responsibilities
- Separation of assessment and taxation enhances transparency and accountability between those who assess value and others who set tax rates
Rate-Driven Systems
- Rate-driven systems can legitimize taxpayer misconceptions, leading to the belief that reappraisal raises property tax and assessors determine amount/distribution
Undervaluation of Properties
- Systematic undervaluation of certain properties or property classes effectively results in a de facto exemption
- De facto exemption impacts the burden on others and increases it because some taxpayers do not pay their fair share
Property Tax Relief
- Targeting property tax relief to those with the highest need makes circuit breakers more cost-effective than broad exemptions
- Circuit breakers offer targeted relief based on income/need, avoiding extensive revenue loss
Minimizing Exemption Effects
- To minimize negative effects, exemptions is to ensure they are written clearly and specifically, and construed narrowly
- Well-defined exemptions reduce misuse while maintaining fairness in the tax system
Argument Against Property Tax Incentives
- A key argument against business property tax incentives is that they breach neutrality for a good tax
- Neutrality requires tax systems to be fair and to not favor business newcomers over existing competitors
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