Property tax principles and indicators
This presentation is the property of its rightful owner.
Sponsored Links
1 / 30

Property Tax Principles and Indicators PowerPoint PPT Presentation


  • 91 Views
  • Uploaded on
  • Presentation posted in: General

Property Tax Principles and Indicators . Eric Willette Minnesota Department of Revenue Presentation to House Property Tax Division February 9, 2011. Introduction to the Property Tax System. Property is taxed according to value Predictable for government May not reflect ability to pay.

Download Presentation

Property Tax Principles and Indicators

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Property tax principles and indicators

Property Tax Principles and Indicators

Eric Willette

Minnesota Department of Revenue

Presentation to House Property Tax Division

February 9, 2011


Property tax principles and indicators

Introduction to the Property Tax System

  • Property is taxed according to value

  • Predictable for government

  • May not reflect ability to pay


Property tax principles and indicators

A brief history of the property tax

  • 1849: 1st Territorial Legislature enacts property tax

  • 1913: Classification of property

  • 1968-1972: ‘Minnesota Miracle’

  • 2001: ‘Big Plan’


Property tax principles and indicators

Administering and monitoring the system

  • Administered by 87 counties

    • 3,300 individual taxing jurisdictions

    • 2.5 million property parcels

    • Total market value of taxable property is $580 billion

    • Over $8 billion in tax revenue

  • Department of Revenue Oversight

    • Equalization of local assessments

    • Monitoring compliance

    • Licensing, education and training

    • Research


Property tax principles and indicators

Property Tax Inventory Map

For Governments:

Property Tax Levy ÷ Tax Base = Tax Rate

Tax Rates are impacted by:

Disparity Reduction Aid

Special service areas

Levies are impacted by:

Number and scope of taxing authorities

Service demands/mandates

Property Tax Aids and other Revenues

State-imposed levy limitations

Tax Bases are impacted by:

Exemptions

Exclusions

Special valuations/deferments

Tax base definitions/ classification

Parcel Tax Bills are impacted by:

Credits

Senior Deferral Program

Refunds

For Taxpayers:

  • Parcel Tax Base x Tax Rate = Parcel Tax Bill


Property tax principles and indicators

Property Tax Preferences:

Estimated Market Value to Net Tax


Tax principles

Tax Principles

  • Simplicity

  • Efficiency

  • Equity

  • Stability

  • Competitiveness

  • Responsiveness


Property tax principles and indicators

Transparency, Understandability,

Simplicity & Accountability

Taxpayers should understand how their tax is determined, which governmental unit is responsible for the tax and what services are funded by the tax.

  • Is the system clear for taxpayers?

  • for public officials?

  • for administrators?

  • Are decision makers identified?


Property tax principles and indicators

Efficiency & Compliance

The tax should maximize voluntary compliance, minimize economic distortions caused by tax-motivated behavior, minimize compliance and administrative costs.

  • What are state and/or local administrative costs?

  • What are taxpayer compliance costs?

  • Can administrators easily make determinations?


Property tax principles and indicators

Equity

The tax should minimize regressivity (vertical equity). The system should treat similar properties similarly (horizontal equity).

  • Do tax burdens decrease or increase as income rises?

  • Are similar properties or taxpayers taxed similarly?


Property tax principles and indicators

Stability & Predictability

The tax should provide stable revenues over the economic cycle. Significant unexpected changes in tax laws, tax bills to taxpayers and revenues to governments should be minimized.

  • Is system stable / predictable for taxpayers?

  • For public officials?

  • For administrators?


Property tax principles and indicators

Competitiveness for Businesses

The system should minimize any competitive disadvantage of the state relative to other states and nations.

  • Does tax harm ability of Minnesota businesses to compete?

  • Consider services funded by the tax as well.


Property tax principles and indicators

Responsiveness to Economic Conditions

Tax should change with changes in value. Lags in system between a market change and a corresponding tax change should be minimized.

  • Does tax change with value in a timely way?

  • Are data for aid, credit and refund formulas current?


Major indicators

Major Indicators


Property tax principles and indicators

Price of Government Report


Property tax principles and indicators

Price of Government Report

Source: Minnesota Department of Revenue and

Price of Government, End of Session 2010


Price of government report

Price of Government Report

Minnesota Price of Government

____________

State and Local Revenues as a % of Personal Income


Property tax principles and indicators

Property Tax Levies

Source: Minnesota Department of Revenue


Property tax principles and indicators

Market Value Trends


Property tax principles and indicators

Effective Tax Rates


Property tax principles and indicators

State Tax Rankings


Property tax principles and indicators

Homestead Property Tax Burden Report

Regional Median Tax Burdens


Determinants of property taxes

Determinants of Property Taxes

Parcel share of tax base and total local levies

These are affected by:

  • Level of public services

  • Intergovernmental aid and other non-property tax resources

  • Tax base composition and property tax classification system

  • Property tax refunds, credits, exclusions


Property tax principles and indicators

Homestead Property Tax Burden Report


Property tax principles and indicators

Other Indicators

  • Tax Incidence Study

  • Tax Expenditure Budget

  • Assessment sales ratio study

  • Local impact notes


Property tax principles and indicators

Source: Minnesota Taxpayers Association


Questions

Questions?


  • Login