Revaluation only adds to the unfairness of taxes

North Providence Mayor Charles Lombardi seems to have done the impossible. He has presented the Town Council a budget increase of 0.0087 percent, essentially no increase at all. Congratulations!
In a rational and fair world every North Providence homeowner would expect to pay no more in property taxes than last year. Sadly as many as 60 percent of North Providence homeowners will likely receive substantial tax increases. Why?
The answer is revaluation. The new tax bills will be calculated using market values resulting from a revaluation which is going on now. Typical revaluations result in about 33 percent of property owners paying lower taxes and 66 percent paying higher taxes.
And lest you think that the people who are paying more are the rich who are sending their payments to those less fortunate, think again. After the revaluation in North Kingstown last year, some of the owners of the most expensive homes in the city (those more than $2 million) saw tax reductions of 30 to 35 percent, while some owners of properties valued at less than $150,000 saw their taxes double. It’s grotesque.
There are those who argue that indeed, market values are a fair way for citizens to pay taxes. The use of market values for both new owners and existing owners means that the owners of homes of equal market value must pay the same tax. It is fair, they say.
But let me pose this question: If someone were to tear down that modest bungalow next door to you and put up a $750,000 home, do you believe that that is a good and fair reason for you to pay more taxes after the revaluation, regardless of the budget increase?
Think carefully about that. You might see why our property tax system / revaluation is grossly unfair to existing owners as it is currently structured.
We must understand that a revaluation is necessary only to assure that new owners, whether they build or buy, pay a fair tax on the market value of their property. Once the market-based tax rate is determined, it need be applied only to those new owners’ market values.
The following year the new owners shall become existing owners. The impact on new owners under this system is zero. Their taxes would be exactly the same as they are currently.
The rest, the existing taxpayers, will be taxed as currently during non-revaluation years. Properties will be increased in value by the same percentage as the tax-levy increase. In this way all owners shall receive an equal-percentage tax increase to provide the revenue needed to fund the tax levy. If you paid twice as much as someone last year you will pay twice as much this year as well. Never again will part of your tax increase fund someone else’s tax decrease. It’s a gross violation of fair distribution of taxes.
And how do you think prospective businesses will respond when they are told that their property taxes will never increase more than 4 percent per year? Now that’s how to improve the Rhode Island business climate. •
Harvey Waxman is founder of Rhode Island Gets Honorable Taxation. To read more, or to learn about the group, go to www.RightTax.org.

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1 COMMENT

  1. Harvey Waxman has hit the nail squarely on the head. Rhode Island’s current property tax system makes a farce of fairness for every tax payer. Some get windfall tax reductions paid for by the unlucky taxpayers who are forced by the local government to pay for their unearned good luck. When are people going to wise up and contact their local representatives about this? Why not NOW?

    Ed Nicholson