[Another entry in our occasional series on local property taxation: previous posts 1, 2, 3, 4]
Yesterday’s post chronicled England’s two centuries of evolving assessment proxies, and allows us to extract:
We’re gonna find those principles whether you like it or not!
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Important principles in designing real estate tax assessment systems
- Assessment is intended to achieve perceived fairness among assessed properties, so the algorithm needs to apply consistently across many forms of property.
- All assessment is an estimate based on an algorithm applied to a set of proxy factors.
- The more proxy factors, the more ‘accurate’ the assessment, but the more information required.
- Real estate tax assessment and information infrastructure are symbiotic: they develop hand in hand. Assessment sophistication can never materially exceed information gathering capacity.
- Conversely, customer tax-reduction strategies drive government to develop ever-better information-gathering systems.
- Tax schemes influence architecture, driving innovation both for conspicuous consumption (setting fashion by signaling tax and implying wealth) and for deliberate tax minimization.
- Every assessment proxy system eventually self-obsolesces, and must be replaced with one that is more complex, more information-heavy, and less susceptible to artificial tax avoidance.
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These lessons are important today, in developed nations and especially in fusion countries.
Think it has a chapter on blocking up your windows?
