paul’s words

Click your browser’s “Back” button to return to SmashingIkons

TAXES: FAIR AND EQUITABLE?

The Utah Constitution declares “All tangible property in the state, not exempt..., shall be taxed at a uniform and equal rate in proportion to its value....” (Article XIII, “Revenue and Taxation”, Section 2). But that “uniform and equal rate” does not assure that the taxes will make “common sense”.

From 2009 to 2010 property values (market prices) in Salt Lake County went down. Taxes on some houses went up; some went down. The taxable value of my home did go down but the taxes went up. The tax difference is related to the size of the decrease in taxable value: a large value decrease could mean a tax decrease; a small value decrease could actually mean a tax increase. All because tax rates went up uniformly within tax districts (nearly 8.2% in a tax district near downtown Salt Lake City).

To illustrate, consider two houses in that near-downtown tax district. The values are fictional and rounded; the tax rates are real.

House #1 - market price, 2009: $727,300
2009: taxable value - $400,000; tax - $5,533.60 (tax rate: 0.013834)
2010: taxable value - $340,000; tax - $5,522.06 (tax rate: 0.015359)
The taxable value went down $60,000 (15%) and the tax went down $11.54 (0.2%)

House #2 - market price, 2009: $436,400
2009: taxable value - $240,000; tax - $3320.16 (tax rate: 0.013834)
2010: taxable value - $225,000; tax - $3455.78 (tax rate: 0.015359)
The taxable value went down $15,000 (6.25%) but the tax went up $135.62 (4.1%)

That tax decrease for House #1, $11.54, may or may not matter to the owner - it’s a couple of lattés in a year. Still, it is a smaller tax.

It is “equal treatment under law”: the properties are “taxed at a uniform and equal rate”. But the result defies common sense and it just doesn’t seem fair that House #1 pays a smaller tax while #2 pays a larger one.

W. Paul Wharton