1. For taxation purposes, property is usually assessed at a fractional part of i

Question

1. For taxation purposes, property is usually assessed at a fractional part of its sale
(market) value. Revenues are determined by applying tax rates against these assessed
values. Since states use different percentages of sale value in calculating assessed value,
comparisons between states require the determination of sale values and true tax rates.
(assessed value) (tax rate) = (sale value) (true tax rate)
(AV) (tr) = (SV) (ttr)
Thus, if property valued at $ 100,000 and assessed at $40,000 has a tax rate (sometimes called apparent tax rate) of 40 mills, it would have a true tax rate of 16 mills. If the assessed value of a piece of property is 25 percent of its sale value, you know immediately that its true tax rate is what percent of its apparent tax rate?

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2. If a piece of property is assessed at $12,675 under a fractional practice of 65 percent,
what is the sale value of the property?

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3. If a district requires revenue of $1,487,424 and the sale value of all taxable property is $106,000,000 (to be assessed at 60 percent), what will the tax rate be in dollars per $100 of assessed valuation?

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4. Mr. Smith has a house assessed at $51,000 (60 percent of sale value). His tax is $3.50 per $100 of AV. Mrs. Jones has a house assessed at $35,550 (45 percent of sale value). Her tax rate is 36.2 mills. From the following information, answer the following: Who pays the greater tax?

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5. How much greater?

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6. Using the tax rate and the assessment practices of Mr. Smiths district, how much tax would Mrs. Jones pay?

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7. Ms. Brown has a house assessed at $ 55,800 (62 percent of sale value). Her tax rate is $ 3.25 per $ 100 of assessed valuation. Mr. Barnes has a house assessed at $ 42,720 (48 percent of sale value). His tax rate is $ 32.75 per $ 1,000 (AV). Who pays the greater tax?

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8. How much greater?

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10. Reducing the number of school districts in a state will generally reduce the difference in ability to support education between the wealthiest district and the poorest district in terms of assessed valuation per pupil to be educated. Construct a problem in a state (real or mythical) and show that this statement is true or false

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Explanation / Answer

1)Let the sale value of a property be ‘x’

Using the example $100000 has tax rate of 40mills , assessed value $40000 has a tax rate of      16 mills then by using the above formula we get that if the assessed value of a piece of property is 25% of its sale value then true tax rate is    

               Or, 25000 *25 = 100000 * True Tax rate

                Or , True Tax rate is 6.25% of apparent Tax Rate

               Hence, the answer.

           2)If the piece of property is assessed at 65%

               Let the sale value be “x”

                 So, $12675 = 65x

                Or, X= 12675/65 *100

                Or , Sale value = $19500 ( Answer)

          3) District requires revenue of $ 1487424

             Sale Value is $106 000 000 assessed at 60%

              So the tax rate will be:

           1487424 = 106000000 *. 60 *x

           Or, x = 1487424/106000000*.60

                Or, X = $2.338716 or $ 2.34(rounded off)

            Hence, the answer.

         7)Ms. Brown has : (55800/100 *3.25) = $1813.50

            Mr. Barnes : (42720/1000 * 32.75) = $ 1399.08

Hence Ms. Brown pays the greater tax

         8) $1813.50- $1399.08 = $414.42(answer)

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