RE: “Property Taxes” 10.22.03
Thursday 13 November @ 00:12:23
Your recent cover story on the phase-out of the Limited Market Value law betrays a lack of understanding of some basic taxation policy questions.
The author tried to be balanced and complete, even calling around to find someone to defend the case against LMV. He should have called some of the suburban homeowners who are being taxed on the full value of a recently purchased home.
Most taxes in this country are of one of a few main types: income, asset, sales, or use. The property tax is almost unique in being the only direct levy on taxpayer assets. Compared to a tax levied on income, an asset tax is more concentrated on the wealthy.
This is true because the distribution of wealth—net assets—is highly concentrated at the top. (We've all heard that the wealthiest few percent own nearly half the wealth.) The distribution of income, however, is less highly concentrated.
Given the acute revenue shortage at the state and local levels, I think that closing the LMV loophole is an idea whose time has come. Yes, it is a loophole when one taxpayer with a home in the city is paying half as much as another with an equally-valuable house.
It is unfortunate that some of the low and fixed income homeowners will see large increases in property taxes in the next few years. A few will undoubtedly be “taxed out” of their homes, especially in the central cities of Minneapolis and St Paul. Some others, however, may end up paying lower property taxes than they otherwise would have. They might be able to stay in their home when a higher tax rate (required to compensate for LMV) would have have pushed them out.
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