Paying tax based on ownership of property was considered in ancient times, but on the other side, the modern tax has roots in feudal obligations owned to European or British landlords or kings. In the 14th and 15th centuries, the British tax assessors used occupancy or ownership of the property to estimate the amount of tax to be paid. In the UK the tax was calculated in the system of “rates” based on the annual value of a property.
American colonies’ taxation
At the start of the revolutionary war, the colonies consisted of well-developed tax systems that had a war against the world’s leading military power thinkable. The tax structure differed for each colony, but in common there were five types of taxes.
- Capitation taxes were imposed on adult males and sometimes on slaves at fixed rates.
- Property taxes were imposed at fixed rates on enumerated items. Sometimes, the items were taxed based on their value.
- Faculty taxes were imposed on the earning capacity or faculty of each person having certain skills or following certain trades.
- Tariffs were imposed on the exports and imports and excises were imposed on the consumption goods, especially liquor.
Americans for growth coalition were never against the tax systems but they eventually hoped for a better calculation system.
Uniformity in the nineteenth century
In 1796, seven out of fifteen states imposed uniform capitation taxes. Twelve of them taxed some or all of the livestock. The tax on land was calculated in different ways, but only four states calculated the mass of property by valuation. In 1818, Illinois first adopted the uniformity clause followed by Missouri in 1820. In 1834, Tennessee replaced the provision asking that land be taxed at a uniform amount per acre with a provision of it to be taxed according to its value. By the end of the century, 33 states had included uniformity clauses in new the newly formed constitutions or amended the old ones to include property tax to be calculated equally by value.
Failure of general property tax
At the beginning of the 20th century, criticism on universal property tax or uniform property tax was widespread. One of the leading students of taxation defined the tax as administered; one of the worst taxes ever used by any civilized nation.
There are several reasons behind failure of the general or uniform property tax. The advocates failed to deal with the problems that arose due to differences between property as a legal term and wealth being an economic concept.
Another major problem arose due to the inability or unwillingness of elected assessors to calculate the value of the property at full value. An accessor who valued the property below the market value and changes its values frequently became more popular and more apt to be reelected.
Reforming property tax in the 20th century
Efforts to reform the property tax were different for different states, but mainly included centralized assessment or utility and railroad property and also the exemption or classification for few forms of property.
Montana in 1910, divided the property into 6 different classes where assessment rates ranged from 100% of proceeds of mines till 7% for credits and money. In 1913, Minnesota’s law divided tangibles assets into 4 different classes, each having a different rate. Few of the states replaced town or township assessors with country assessors and many even created agencies to train and supervise the local assessors.
The years after 1929 i.e. depression stage resulted in widespread property tax law-breaking and in many states the taxpayers deliberately struggled to tax law-breaking property. State governments imposed additional limits on property taxes and even exempted the owner-occupied residences from taxation. These exemptions were criticized on a later date as they provided relief of large amounts to the wealthy homeowners and comparatively reduced the revenue of local people whose tax base was made largely by the residential property.
After World War II many states replaced homestead exemption with state financed “circuit breakers” to benefit the lower and middle income homeowners as well as the older owners and disabled persons.
Property tax today
In most of the states, the assessment technique has improved greatly. CAMA (computer-assisted mass appraisal) combines computer technology, statistical methods, and the valve theory to make reasonable property tax assessments. An increase in state school aid, court decisions to have equal school quality, has resulted in increased pressure for the statewide uniformity in the assessment. Some states use elaborate statistical procedures to measure the quality and quality or assessment among every place in the state. Now the departures from uniformity come less through the poor assessment than that of the property statutes.
Josh Welch and his team is working to bring awareness among people and are not opposing the tax structures. Josh Welch is a founder of Americans for Growth Coalition and runs a Houston-based real estate firm having almost $200M assets. Being a successful business owner who has created hundreds of jobs, he is passionately fighting for the issues he cares about for more details please visit our website.