Ignore the rhetoric - if you pay more, it's a tax hike
By HOWARD TROXLER
Published July 11, 2006
Harry Homeowner was walking along, whistling a tune, when he saw Mayor McCheese leading a marching band down Main Street.
The band was playing For He's a Jolly Good Fellow.
Mayor McCheese saw Harry and stopped the music. "Good news, citizen!" cried the mayor. "I have cut your property taxes!"
He handed Harry a tax bill. Harry looked it over - and saw that his bill actually was bigger than the year before.
"With all respect, I think you might be mistaken," he told Mayor McCheese. "This is not a tax cut. I owe you more money than ever."
Mayor McCheese laughed. "Ho, ho, ho, citizen! You don't understand how these things work. I have cut your tax RATE. Therefore, I have cut your taxes."
With those words, the band struck up Jolly Good Fellow again. The mayor indulgently nodded and held up a hand asking for quiet.
Harry still did not understand. "But it says I owe you more money than last time," he protested.
"Well, that's not MY fault," Mayor McCheese said. "I am a tax cutter. I am the good guy here." With a barely audible "ding," a halo appeared in the air over his head.
"Then whose fault is it?" Harry asked.
"Blame it on Property Appraiser McNasty," the mayor said. "He's the one who decided your house is worth more than last year."
With that, the band struck up Happy Days Are Here Again, and the mayor resumed the parade and headed down the street.
So Harry went to see Property Appraiser McNasty.
"Mr. McNasty," he said, "Mayor McCheese tells me that he has given me a tax cut, but that my taxes are going up anyway because you increased the value of my property."
"Why he did, did he?" exclaimed McNasty. "When I see him, I'll have a thing or two to tell him!"
McNasty explained to Harry how things work in Florida. He said there are TWO steps to calculating a tax bill:
* First, the government decides how much your property is worth. Each county has its own elected "property appraiser" to do that job.* Second, each taxing authority (the city, county, school board and so on) sets its own "tax rate." That tax rate is applied to the assessed value of your property."It seems to me, then," Harry mused, "that there are really TWO ways the government can raise taxes on me. It can either raise the tax rate - or it can jack up the value of my property."
"You have cracked the code," Property Appraiser McNasty said.
"So if my tax rate stays the same, but my property value goes up, that's a tax increase."
"You are correct."
"And even if Mayor McCheese cuts my tax rate, it's still possible I might pay more."
"Correct again. To be a true tax cut, the tax rate has to go down faster than your property value goes up."
"Does that ever happen?" Harry asked.
"Sometimes, but not usually," McNasty said. "Usually, local governments in Florida cut their tax rates by a little bit - but not by as much as property values went up. So tax collections go up every year."
"So local officials who claim that they have 'cut taxes' or 'held the line' often have actually raised my taxes?" Harry asked.
"Correct once more," McNasty said. "Not that it is automatically wrong. You know, it is perfectly reasonable that local governments might need a little more money each year.
"Still, it's a fair question whether the cost of Florida local government is really going up as fast as property values these days."
Harry was exasperated. "What should I do?"
"I have two pieces of advice," McNasty said. "In August, you'll get a notice in the mail of your proposed taxes. On that notice, there will be a list of public hearings for each government that's taxing you. You can attend them.
"Second, as tax rates are being debated across Florida this summer, I would ignore the rhetoric of local politicians. If you end up paying more, then they have raised your taxes."
"That makes sense," Harry said.
"It is the only thing in this process that does," said Property Appraiser McNasty.