The Guilford County Tax Department says it will notify residents of property revaluation results next month.
Many of us might find that the value of our property is down.
Forsyth County is a year behind in this process but commissioners there had a discussion yesterday about the expected impact of lower property valuation (Winston-Salem Journal report).
"County tax assessor John Burgiss said Thursday that if the current trend in real estate sales continues, the tax value of property in the county could drop from $33.9 billion to about $31.6 billion when the next revaluation is complete in 2013 — a drop of about 7 percent.
"With other revenues expected to be flat, the result is that county commissioners could have to raise the tax rate by 7 cents for the 2013-14 fiscal year to close the gap — or else drastically reduce spending. ...
"Under the current tax rate, the owner of a $150,000 house pays $1,011 in county property tax.
"To keep property tax collections 'revenue-neutral' after revaluation in 2013 — meaning the county takes in no more and no less revenue from property taxes — the tax rate would increase to 71.08 cents and the taxpayer would have a county tax bill of $1,066.20."
The bold type is mine. It's my way of saying beware revenue neutrality.
It's a term you hear often, and it sounds innocuous.
And in some cases, it probably is.
But not so much when talking about property taxes.
What revenue-neutrality means on a county level is, if property values slip, as we know they have in the last few years, the tax base declines. If property is taxed at the same rate, it will generate less revenue. Therefore, the tax rate should be raised enough to produce the same amount of revenue for the city and county as before. You have revenue-neutrality. And neutrality means no harm is done. There's no real tax increase.
The first caution about that is that this is a matter of neutrality on average. Property values don't all change by the same amount or in the same direction. Some may drop 10 percent, some 20 percent. Some might hold steady. So changing the tax rate won't affect all property owners equally. Some may end up with a smaller tax bill, some a larger one. Only the average guy will experience neutrality.
Except maybe he won't, either.
See, the property tax is really based on your wealth as measured by the real property you own. For many people, their home makes up the bulk of their net worth. Your wealth, as measured by your property, determines how much property tax you pay. If you own a million-dollar property, you're pretty wealthy and you will get a hefty tax bill. Fair enough.
But if your property value drops, say 20 percent, you're not as wealthy anymore. You've just taken a big hit to your net worth.
To use another term, you have not gotten off with wealth-neutrality. So, if you are asked to contribute to revenue-neutraily by paying a higher tax rate, it means you've got to kick in a considerably larger share of your wealth to do it. Fair? It's hard to make that argument. It certainly goes against the notion that the wealthy should pay more and the less wealthy deserve a break. Everyone whose property value drops is less wealthy, yet none will be promised a break if the guiding principle is to maintain revenue-neutrality.
Instead of that term, taxpayers might want to focus the conversation on wealth-neutrality.