The County Line
- Volume 51, Number 1 - 2007
How does Alabama's system for reappraising property for ad valorem taxes affect your county?
By now, the time spent writing this column may have been completely wasted.
If the Alabama Legislature has already abolished the state’s annual system for reappraising property for ad valorem tax purposes and replaced it with one that checks property values only once every four years or so, then turn the page and don’t waste your time, too.
However, if the debate is still continuing, then you might want to read further to see how most of the folks who are pushing for four-year reappraisals have missed the entire boat. No, missed the entire fleet.
A few years ago Alabama moved away from its old practice of “requiring” reappraisal only once every four years. Over a five or six year period, the state would require each county to install a system could be used every year to determine the value of property at that time and apply the ad valorem tax to the property’s “current” value. It was a decision made to keep the state out of federal court and to ensure the state’s tax system would be “fair” to all property owners.
Valuing property every four years was a practice established in a day when computers were so big that they took up an entire room and so expensive that only the largest corporations could afford to buy and operate one. The practice was established out of practical necessity – not as the result of a comprehensive study of the good or bad points of valuing property only five times every 20 years.
Technological advances not only make such an annual valuation possible, it is not even all that difficult. It takes an investment in computer technology, personnel and retraining. Once-established and implemented in each county, however, the system can operate to be fair to all taxpayers.
At the conclusion of this fiscal year, all but three of the counties in Alabama will have complied with the requirement that they shift their property valuation process to an annual basis. The other three will go on line next year. And there have been problems in the implementation phase, but those are being worked out in a positive and productive way.
No one predicted the firestorm that would arise following the decision to phase in this reappraisal process. But, I guess, we should have known. Look around your neighborhood, in your Sunday school class or at the grocery store and see if you find anyone who wants to pay more in taxes. When you find someone, let me know. I suspect you’ll be looking a long time.
The negative reaction from the general public should not have been a surprise, nor does it mean the decision was incorrect or should be reversed. The truth is, this decision is the most fair tax decision that has been made in any of our memories. And, for that reason alone, any discussions of moving away from this annual valuation process are really arguments for a tax system that will be less just and less equitable to the taxpayers of Alabama.
How can this be so, you may be thinking?
Well, first, let’s look at the other taxes that fund government activities in Alabama and around the country as a comparison. Except for income tax, the other taxes make no attempt at reaching any level of fairness to taxpayers based on their ability to pay. Bill Gates and the single mother of four working for minimum wage in rural Alabama pay the same sales tax rate on a gallon of milk, a package of chicken or a can of soup. Ditto for taxes on gasoline, garbage collection, water service, electricity and the list could go on and on. The dollar amount of almost every tax is the same, no matter your income level or ability to pay.
But ad valorem taxes – that is a tax based on the “value” of the property you own – reach at the very heart of fairness. If you are fortunate enough to own property, you pay the tax rate on the “value” of the property. If you own very valuable property (like Mr. Gates) your taxes will be much more expensive than the taxes paid by that single mother.
And, if everyone could take their hands off their own pocket books for one minute and think clearly, they would realize that to do otherwise would go against all those principles that we so proudly brag of when holding out our nation as “the greatest country in the world.”
I’ll leave a discussion of the legal impact of shifting back to four-year appraisal to those who get paid to stand before federal judges and make arguments. However, I know the practical impact and can explain it very clearly.
A change to four-year reappraisals will allow those who have very valuable property – property that is growing in value – to escape their rightful and proper share of the tax burden for Alabama schools, mental health services, Medicaid, prisons, local government operations, fire protection, hospital services and everything else. This change would mean those taxpayers who own property that is going down in value (most often the poor) would be required to pay an inflated tax rate for four years until their property could be reevaluated.
And, there’s another important impact, based on freshman economics class.
The price of providing government services increases every year just like the price of providing any other service -- employees must be paid higher salaries, the cost of our raw materials (equipment, utilities, supplies and such) increase each year. So shifting to reappraisal on a four-year basis will only force state and local government to utilize another source of income to provide the basic government services.
What will be the source of this replacement revenue? One of those other taxes that is, at its very core, more unfair in its application.
Now, I have not lost sight of the basic realities of raw politics. Those running for office can certainly gain popularity by pointing their fingers at the bad old “Alabama Department of Revenue” for making this change. And they can make pledges to correct this horrible injustice known as annual reappraisal. But those pledges cannot be made in the name of fairness or equality. Such an argument just doesn’t wash.
What could be fairer, your property will be valued each year and you will pay your property taxes based on the value of that property? You may not want to pay the tax, but that simple fact does not make the annual reappraisal process “unfair.”
And, if you have read down this far into the column, it must mean that fairness in the application of ad valorem taxes in Alabama is still alive – even if there are those who continue to work for its death.
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