Fundamentals of Tax Policy
HOW TO ORDER:
To order the book visit the online store.
Fundamentals of Tax Policy is dedicated to Dr. Glenn W. Fisher, Regents Professor Emeritus at Wichita State University. Dr. Fisher was instrumental in providing leadership and inspiration in the discussion and presentation of tax policy issues in IAAO forums. He was a key developer of the first IAAO Tax Policy Course and a contributor to and reviewer of Property Appraisal and Assessment Administration.
His book, The Worst Tax?: A history of the property tax in America, provided source material for many of the sections of this tax policy book.
by Richard Almy, Alan Dornfest and Daphne Kenyon
a book review by Mike Goodwillie, Chief Office Deputy Appraiser, Douglas County (NE) Assessor’s Office, and Barry Couch, Chief Field Deputy Assessor, Douglas County (NE) Assessor’s Office
When people who work in mass appraisal or assessment administration discuss policy matters that affect their work, they often operate from a common set of assumptions that frame the discussion. They may not stop to ask “Why?” with respect to the reason the jurisdiction in which they work chooses to value property the way it does, budget the way it does, or tax the way it does. However, those are often the questions that thoughtful lay people ask, whether they are legislators or other government officials or simply concerned taxpayers. Fundamentals of Tax Policy provides a comprehensive look at such questions, seeking to examine and explain the basis for property taxation and administration.
This work is a further step in the advancement IAAO has made in the area of tax policy. The idea of educating our membership regarding tax policy began during the mid-1990s when Dr. Glenn W. Fisher developed the original course 402. For those who attended those early offerings, the book is an indicator of how far the organization has come in terms of providing useful information on this topic to its members. Because the property tax is often an unpopular tax, as outlined by Dr. Fisher, a book of this nature is a much needed work not only for local jurisdiction administrators but for those looking at alternatives for the funding of government services at the national and state levels.
This book will be useful to local, state, and provincial assessing officers and tax officials, members of the academic community, legislators, tax researchers, and governmental administrators. It looks at a broad range of topics, from the history of property taxation to the components of a model property tax administrative system to prospects for the sustainability, and likely future of, the U.S. property tax as an institution. As you read the book, you find yourself assessing your jurisdiction in comparison to the topic being discussed. This is a useful function for several reasons. First, any jurisdiction can probably find ways to improve what it does, from an administrative standpoint. Second, comparing your jurisdiction to the topics of discussion in the book will better enable you to articulate to both policymakers and the public the pros and cons of the current system in your jurisdiction and potentially, any policy alternatives that may be suggested.
There were several features that I thought were particularly interesting. One was a series of charts that analyzed funding of government services, tax rates, sources of revenue and tax burdens by state. While there are certainly factors that have to be considered in understanding and utilizing such data, they do provide a snapshot of what a particular state and its neighbors are doing in these areas. This sort of information is compiled by a number of other groups but you sometimes wonder if the data and how it is analyzed is skewed by the ideological predisposition of the entity providing it. With an IAAO text, I think one can rely on the data with confidence.
The authors, in different portions of the book, discuss the impact, both positive and negative of the efforts to lessen what are perceived by legislators and members of the public as unfair property tax burdens. One example is the discussion of the use of value constraints that restrict assessed value increases to a certain percentage in any one year. In times of rising valuations, constraints were proposed in a number of jurisdictions to control the “sticker shock” of rapid valuation increases. The rationale for such constraints was to protect the middle class or less wealthy taxpayers from valuation “spikes” which could generate significant increases in property taxes. However, in analyzing the actual effects of such constraints, the reality appears to be that those taxpayers whose properties are appreciating in value less rapidly end up losers, taxwise, compared to owners of more valuable property that is increasing in value in the market at a higher rate. There is a similar discussion of acquisition value, using California as an example, exemptions, property tax deferrals, circuit breakers, and tax credits as well. Such analysis could prove very helpful to an assessing officer if such alternatives are proposed for his or her jurisdiction and policymakers ask for guidance on the potential impact of such alternatives.
Throughout the book, the authors discuss trends in property taxation. For example, they note that the percentage of school district revenue derived from local property taxation has declined over a twenty year span but that those revenues has been replaced by some form of state funding, either through other state taxes or through the institution of state property taxes. There is also some useful discussion of potential alternatives that could be proposed in jurisdictions in which pressure exists for immediate property tax relief, along with the cautionary note that too many “quick fixes” for property tax relief may reduce criticism of policymakers but it may also make the system weaker and, therefore, less able to adequately fund local services. Not only does the book look at the manner in which jurisdictions in the United States tax property but it also takes a global perspective and analyzes tax systems in a number of countries around the world.
As an example of the relevance of the book to all property tax administrators and other tax policy makers, several sections dealt with issues that we are dealing with in our county. One County Commissioner is pursuing the option of self-assessment by taxpayers. Another wants to replace property taxes in our county with sales and income taxes. The book explores the pros and cons of such policy alternatives.
Obviously, Fundamentals of Tax Policy is a work aimed at a fairly specialized audience. But no matter how savvy and well-educated an assessing officer may be, it is a book that should be on the shelf in every assessment office.