Lawmakers dodge property tax burden issue

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While the state is dramatically dependent on income tax for revenue, municipalities live and die with property tax in Connecticut, a situation which has resulted in depressed communities being slammed with 30 plus rates while wealthier ones enjoy rates well below that.

And for years, lawmakers have said something should be done about it.

Here’s how property tax works. You own a piece of property. The town sends assessors out who look it over and then compare it to the market rate, or how much homes are selling for in the town and your specific neighborhood. Then the value is assessed and the town taxes 70 percent of that.

Now, when the real estate market booms, the value of the homes goes up and the cities and towns set their millage rates based on the total value. If the majority of homes increase in value, the town can raise the same amount of money with a small mill rate. If, however, the inverse happens, and values plummet, the town raises the money to cover its budget by increasing the mill rate. Theoretically, your actual tax bill should not fluctuate much year-to-year under this system. But, as the property taxes support fire departments, school districts, police and a lot of other vital and expensive municipal operations, property taxes have become a problem in some cities and towns.

Well, what Gov. Dannel P. Malloy has in mind so far to address this is to allow communities to phase in declines in assessments over five years, like they can massive hikes.

The idea is to prevent cities and towns from dramatically hiking in a single year mill rates when property values crash. (Warning total editorializing going on next sentence.)

Instead, they will be able to slowly tax homeowners to death instead of going for the swift kill.

Categories: Economy, Main Street, Taxes
Rob Varnon

One Response

  1. The only thing phasing in the lower assessment will do is prevent a shift of tax burden to personal property and cars. Since those two items are always taxed based on their current value, typically in normal times when property values go up, there is a shift in tax burden to real estate owners as the mill rate can be lowered because of an increase in the grand list. Therevaluation doesn’t affect personal property and auto valuations which have a seperate formula for thier calculations, the lower mill rates mean lower taxes on those items. However, due to real estate declining values most towns are finding lower grand lists requiring higher mill rates which results in higher taxes on cars and personal property. Here is an article explaining the process in more detail http://rapidappraisalinc.com/understanding-revaluation-in-a-declining-market/