Tuesday, September 25, 2007

"Is Truth in Taxation a lie? LTE submission

Dear Friends and Neighbors,

So much is happening so fast. Senator Neiderhauser is calling for a public approval vote before any tax increases. Sounds good, except if taxing entities interpret it as a tax rate increase or Certified Tax Rate or as some call it "the mil levy" increasing, the Commissioners will just do like they have begun to do to get around TNT or State law and jack up assessments without raising the rate incuring Public TNT hearings or tax increase elections. So although perhaps well meaning, it just shows a lack of understanding of the current situation by some in the legislature unless the Tribune Article left out some information.

"To keep clear of concealment, to keep clear of the need of concealment, to do nothing that he might not do out on the middle of Boston Common at noonday-I cannot say how more and more that seems to me to be the glory of a (young) man's life. It is an awful hour when the first necessity of hiding anything comes. The whole life is different thenceforth. When there are questions to be feared and eyes to be avoided and subjects that must not be touched, then the bloom of life is gone. Put off that day as long as possible. Put it off forever if you can." Phillips Brooks

Is "Truth in Taxation" a lie?

"Because "Truth in Taxation" is revenue-based, a hearing may still be required if an entity's tax rate remains unchanged or even declines. For example, if property values increase 10 percent as the result of reappraisal, but a taxing entity does not lower its rate proportionately, it must advertise and hold a "Truth in Taxation" hearing. The (TNT) hearing is required because the increase in value is not considered new growth.

Many taxing entities continue to be confused by this concept and attempt to compare the previous year's tax rate with the current year's proposed rate to determine if a tax increase will occur. Under a revenue-driven system, changes in rates are irrelevant." Quotation taken from "Utah Property Tax" http://www.propertytax.utah.gov/about/truth.html:

Question to Weber County Commissioners, "Did you hold Truth in Taxation meetings?
Commissioner Zogmaister, "We didn't have to. We didn't raise taxes (or tax rate)."

The Weber County Budget increased from 100 million to 126 million. That is a 26% increase.

The Davis County Assessor recently admitted Bountiful had not been reassessed for ten (10) years. Yet State "Truth in Taxation" law requires all properties be reassessed at least once every five years and the State Constitution seems to suggest an annual assessment.

The Utah State Tax Commission has legal jurisdiction and oversight responsibility over all taxing entities. Yet the law is not seemingly being enforced, hence we are being run over by record setting disparate taxation for the past three years, without any legal protections.

Our only public explanation is, "Oh, well...the Perfect Storm, Utah has seen record increases in real estate values." Truth is we have seen insular successes of the Real Estate Association (there are 10,000 members in Utah) lobby efforts which protect 6% commissions from every possibility of legislative relief. The status quo automatically increases multiple listing services (MLS) based "comps" which include "curb enhancement" costs as part of "current market value" appraisals. And For Sale by Owner (FSBO) sales are not included in the MLS computations. If these FSBO sales were included they would also lower appraisals and ultimately assessments based on these false MLS values. Paying someone to sell my home does not add value to it. Neither does "lipstick and rouge" curb appeals designed to market my home add value to my home or any MLS listings used as "comps". But a neighbor with a similar home which he or she sells themselves for less certainly does.

It is time for "acquisition value" based taxation since "Truth in Taxation" is neither followed nor enforced. Truth in Taxation law is in effect a lie about taxation. The Tax Commission is either under-staffed, over-worked, hobbled by other legislation or successful lobby efforts, and therefore is a "toothless watch dog". Put simply, if our current law is too hard to understand, too difficult to administer and impossible to enforce it is bad or outdated law. It needs replacing with a simple, fair and equitable "acquisition value" tax code already in place for decades in the majority of States. Act now legislature, before it is too late.

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