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1/12/2012
Property Tax Burdens of U.S. Cities:
How They Rank and What to Know About the Rankings?
Mark Haveman, Executive ...
1/12/2012
The 50-State Property Tax Comparison Study
• “Payable 2014” is our 14th edition,
3rd in partnership with the Lin...
1/12/2012
What Does This Study Do?
• Answers the question: “Who imposes the highest property tax burdens
relative to prope...
1/12/2012
Key Features – What Makes It Unique?
• Parcel and property class focused (rather than based on aggregate
propert...
1/12/2012
How Do We Compute the Net Tax on a Property?
Net Property Tax = ((TMV x SR) – EX) x CR x TR – C
Where
TMV = prop...
1/12/2012
Study Limitations
• Only looking at one piece of a larger tax regime
• Still location specific -- largest city a...
1/12/2012
A Look at the Northeast
Rank Amount Rank Amount
Bridgeport, CT 1 4.040% 2 $6,601
Portland, ME 13 1.913% 9 $4,400...
1/12/2012
A Look at the Northeast
City, State Rank ETR Rank ETR Rank ETR
Bridgeport, CT 7 3.415% 17 1.901% 5 3.481%
Portla...
1/12/2012
A Look at the Northeast – Rural Areas
City, State
Home,
$150,000
Commercial,
$1million
Industrial,
$1million
Apa...
1/12/2012
A Look at the Northeast – Classification Ratio
• Compares the effective tax rate on $1 million commercial proper...
1/12/2012
QUESTIONS?
www.FiscalExcellence.org
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Property Tax Burdens of U.S. Cities: How They Rank and What to Know About the Rankings

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Mark Haverman, Executive Director of the Minnesota Center For Fiscal Excellence, discusses the annual 50-State Property Tax Comparison Study, done in partnership with the Lincoln Institute of Land Policy

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Property Tax Burdens of U.S. Cities: How They Rank and What to Know About the Rankings

  1. 1. 1/12/2012 Property Tax Burdens of U.S. Cities: How They Rank and What to Know About the Rankings? Mark Haveman, Executive Director Minnesota Center for Fiscal Excellence Economic Perspectives on State and Local Taxes Lincoln Institute of Land Policy December 4, 2015
  2. 2. 1/12/2012 The 50-State Property Tax Comparison Study • “Payable 2014” is our 14th edition, 3rd in partnership with the Lincoln Institute • Compares effective property tax rates for commercial, industrial, residential, and apartment properties in the largest city of each state (and DC) and a rural area in each state • “Payable 2015” will be completed in April, 2016
  3. 3. 1/12/2012 What Does This Study Do? • Answers the question: “Who imposes the highest property tax burdens relative to property value?” • Effective tax rate = tax burden / market value • By holding market values constant, we control for different real estate conditions • This isolates the influence and impact the design of a state’s property tax system has on effective tax rates and enables cross state comparisons • Provides a measure of the “structural competitiveness” of the state’s property tax system
  4. 4. 1/12/2012 Key Features – What Makes It Unique? • Parcel and property class focused (rather than based on aggregate property tax collections) • Includes business property • “Bottom up” approach models all major property tax system components • Additional features provide insights and answers to some other common property tax questions: “What is the impact of assessment limitations on homestead tax burdens and state rankings?” “How much property tax subsidy do business properties provide to homeowners and how does that compare to other states?” “How do the property tax burdens for the median homeowner compare across the country?”
  5. 5. 1/12/2012 How Do We Compute the Net Tax on a Property? Net Property Tax = ((TMV x SR) – EX) x CR x TR – C Where TMV = property value in an arms-length transaction SR = sales ratio EX = exempted value CR = classification rate (portion of a property’s value subject to taxation based on property type) TR = total local property tax rate C = credits or refunds (offered to majority of property owners)
  6. 6. 1/12/2012 Study Limitations • Only looking at one piece of a larger tax regime • Still location specific -- largest city and rural city burdens may not reflect general “state reality” • Tax burden comparisons for business properties must be done with significant care • $1 million of business property in Fargo is qualitatively different than $1 million of business property in New York City • Similarly time trend comparisons are difficult (parcels don’t maintain their value over time) • Circuit breakers not included
  7. 7. 1/12/2012 A Look at the Northeast Rank Amount Rank Amount Bridgeport, CT 1 4.040% 2 $6,601 Portland, ME 13 1.913% 9 $4,400 Boston, MA 48 0.708% 20 $2,702 Manchester, NH 6 1.264% 8 $5,035 Providence, RI 18 1.707% 16 $2,933 Burlington, VT 7 2.342% 3 $6,415 Median-ValuedHome Results forTaxes Payable 2014forUrbanAreas (of 53) Effective Tax Rate NetTax City, State
  8. 8. 1/12/2012 A Look at the Northeast City, State Rank ETR Rank ETR Rank ETR Bridgeport, CT 7 3.415% 17 1.901% 5 3.481% Portland, ME 29 2.000% 41 1.100% 21 2.000% Boston, MA 13 2.884% 23 1.590% 40 1.263% Manchester, NH 28 2.031% 37 1.218% 17 2.321% Providence, RI 4 3.646% 16 1.909% 8 2.960% Burlington, VT 23 2.314% 25 1.551% 15 2.364% Business PropertyResults forTaxes Payable 2014forUrbanAreas (of 53) Commercial, $1million Industrial, $1million Apartment
  9. 9. 1/12/2012 A Look at the Northeast – Rural Areas City, State Home, $150,000 Commercial, $1million Industrial, $1million Apartment Litchfield, CT 12 25 34 24 Rockland, ME 14 17 26 16 Adams, MA 13 10 20 17 Lancaster, NH 3 18 22 8 Hopkinton, RI 15 22 29 20 Hartford, VT 5 21 25 13 Rankings forTaxes Payable 2014forRural Areas (of 50)
  10. 10. 1/12/2012 A Look at the Northeast – Classification Ratio • Compares the effective tax rate on $1 million commercial property (real property only) to effective tax rate on median-valued homestead • A measure of how much businesses subsidize homeowner taxes • Ratio < 1 = Commercial properties are under assessed relative to homes City, State Ratio Rank(of 53) Bridgeport, CT 0.868 52 Portland, ME 1.045 39 Boston, MA 4.009 2 Manchester, NH 1.000 tied 43 Providence, RI 1.909 18 Burlington, VT 1.104 34 U.S.Average 1.710
  11. 11. 1/12/2012 QUESTIONS? www.FiscalExcellence.org

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