The Property Tax Shell Game

By J. Brent Pichard

“The art of taxation consists of plucking the goose so as to obtain the most feathers with the least hissing.” ? Jean-Baptiste Colbert

The amount of property taxes paid directly by property owners and indirectly by renters and consumers is a function of two components: 1) the market value of each taxable property (which is a function of increasing or decreasing market values); and, 2) the property millage rate (which is set by elected representatives; or, in the case of the Children’s Services Council, un-elected board members.)  Most citizens understand increasing and decreasing property values but few understand the millage rate and its interplay with property taxes.

Local politicians are fond of using the property tax millage rate as evidence of their low tax policies.  Afterall, the base millage rate has barely budged since General Lafayette owned the seven hills of Tallahassee.  Consider the math.

Let’s say you own a property that is assessed, for tax purposes, at $100,000 dollars and the millage rate for calculating your property tax is 3 mills or $3 per thousand of assessed value.  Since you have 100 units of a thousand, your property tax for that year would be $300 (100 units of a thousand times $3 per thousand).

During the following year, your town has grown; newcomers are creating demand for homes and rental units and property values are on the increase.  The local tax assessor looks over all the sales that have taken place and determines that the assessed value of houses and rental units should be increased to reflect the escalating value of real estate.  Let’s say the taxable value of your rental unit increases from $100,000 up to $125,000.  You now have 125 units of one thousand.  If the millage rate stays at 3 mils, you will now pay $375 which is a 25% increase in your taxes even though the millage rate did not increase.

Most politicians and CSC board members will point to the unchanged millage rate as evidence of their fiscal responsibility and low tax policies.  When you show them your two cancelled checks – one for $300 last year and one for $375 this year – they will feign surprise and say they didn’t have anything to do with that.  The market and the tax assessor must have done that.  If you dare to ask why they didn’t lower the millage rate so your taxes would, in fact, not go up, that is when the vast unmet needs of so many of your fellow citizens will take center stage; needs that can only be met if government has additional resources to “invest” in the community (that’s code for raising taxes.)

Property taxes affect everyone – without exception.  When assessed values and/or millage rates go up, it takes money out of the pockets of the rich, the poor and everyone in between.  It takes money out of the pockets of homeowners and renters.  It takes money out of the pockets of shoppers as business owners raise their prices to cover the increase in their property taxes.

Another trick the politicians use is to separate a government service that used to be a part of the property tax “bundle” of services (or general fund) and give that service its own millage rate: emergency medical service, children’s services council, water management district, sewer, refuse collection, stormwater and fire – each with its own separate millage rate or fee.  Another trick is to cut a service but keep charging you the same or higher rates.  Remember when they used to roll your garbage containers to the street?  Then one day they made you do that for them and without lowering the cost of the service.  That was a hidden tax increase.

This past year, your combined property millage rate for city, county and segregated services was 19.3495 mills or about $20 per $1,000 of assessed property value.  Those numbers will continue to grow.  Government is always looking for ways to quietly increase its revenues while minimizing hissing from taxpayers. 

There is an inverse relationship between increasing taxes and personal freedom.  As taxes go up, your freedom to use your money in pursuit of your own happiness must go down.  When was the last time you heard a politician run on a platform of lowering taxes and shrinking government so as to leave more money – thus more individual freedom – in the pockets of those who earned it? 

J. Brent Pichard was born and raised in Tallahassee. He is a USAF Veteran,
Retired Real Estate Broker and Bank Trust Officer.