Primer on Property Tax

William J. McCluskey is Reader in Real Estate and Valuation at the University of Ulster, where he received his Ph.D. in Real Estate Valuation in 1999. He has held various international positions including Visiting Professor of Real Estate at the University of Lodz, Poland, Professor of Property Studies at Lincoln University, Christchurch, New Zealand and is currently Visiting Professor in Real Estate at University of Technology, Malaysia. His main professional and academic interests are in the fields of real estate valuation, developing automated valuation methods and property tax policy. In addition, he has been an invited instructor in real estate at the African Tax Institute and the Lincoln Institute of Land Policy: China Programme. He is a faculty member of the Lincoln Institute of Land Policy and founding board member of the International Property Tax Institute.Gary C. Cornia is the Dean of the Marriott School of Management at Brigham Young University.  He is the past president of the National Tax Association and has served as State Tax Commissioner in Utah. He has been a visiting Fellow at the Lincoln Institute of Land Policy and a visiting Scholar at the Andrew Young School of Policy at Georgia State University.   He has published a variety of articles on state and local tax policy, decentralization, and property tax.  He received his Ph.D. from The Ohio State University.Lawrence C. Walters is the Stewart Grow Professor of Public Management at the Romney Institute of Public Management, Brigham Young University. His teaching includes courses on land and real estate taxation at the Institute for Housing and Urban Development Studies, Erasmus University Rotterdam. He has over forty publications on public policy and management topics, several of which have received national awards for excellence. He has just completed a property tax policy guide for developing countries sponsored by UN-Habitat and a book on managing “wicked” environmental problems.  He received his Ph.D. from the Wharton School at the University of Pennsylvania.

• About the Contributors xiForeword by David L. Sjoquist xviiIntroduction xxv1 Property Tax: A Situation Analysis and Overview 1Harry KitchenIntroduction 1Role for property taxes 2Importance of the property tax 3Choice of tax base 3Issues in assessment 6Issues with property tax rates 15Incidence of the property tax 26Politics of the property tax 33Future for the property tax 35Summary 35References 372 Value-Based Approaches to Property Taxation 41Riël Franzsen and William J. McCluskeyIntroduction 41Overview of property tax bases 42Value-based approaches 45Concept of market value 54Traditional valuation methods 59Conclusions 63References 643 The Politics of the Property Tax 69Enid SlackIntroduction 69Unique characteristics of the property tax 70Principles for designing the property tax 73Characteristics of the property tax 73Property tax revolts, tax limitations and tax relief 79The politics of property tax reform 81The property tax as a local tax 83Conclusion 86References 874 Administration of Local Taxes: An International Review of Practices and Issues for Enhancing Fiscal Autonomy 89John L. MikesellIntroduction 89Central administration 91Independent local administration 98The special case of property taxes 106Conclusion 119References 1215 Establishing a Tax Rate 125Kurt ZornIntroduction 125What level of government should set the property tax rate? 126Types of tax rates 131Determining the tax rate 133Who sets the rate? 134Rate setting in practice 135Conclusions 138References 1386 Property Tax Collection and Enforcement 141Roy KellyIntroduction 141Policy and administrative determinants of property tax revenues 142Definition of model variables 143Common reasons for low rates of collection and enforcement 149Designing an effective property tax collection system 153Enforcing against noncompliance 161Summary thoughts 168References 1707 The Tax Everyone Loves to Hate: Principles of Property Tax Reform 173Jay K. RosengardIntroduction 173Primary rationale for reform 174Fundamental principles of reform 176Strategic choices in reform 178Policy pitfalls of reform 183Conclusion 184References 1858 Legal Issues in Property Tax Administration 187Frances PlimmerIntroduction 187Tax policy 188Property taxation 192Uniformity/equity/fairness/treatment of taxpayers 198Conclusions 204References 2059 Tax Criteria: The Design and Policy Advantages of a Property Tax 207Gary C. CorniaIntroduction 207Independent and autonomous revenues 209Adequate and stable revenue 211Hedging the revenue bets 212How broad is the tax base? 212Financial support for infrastructure 214Capturing the increased value resulting from public infrastructure 214Immobile base 215Benefit tax 216Ability to pay taxes 217Ease of compliance 218Ease and cost of administration 219Transparent taxes 219Political acceptability 221Subnational tax systems and horizontal inequity 221Advantages of the property tax 222Disadvantages of the property tax 225Conclusion 226References 22610 Estimating Property Tax Revenue Potential 229Lawrence C. WaltersIntroduction 229Fiscal capacity and fiscal effort 231Fiscal capacity 231Estimating aggregate property value 232Property tax capacity and effort in the OECD 235Adjusting for undeveloped land 238Estimating local revenue potential 244Conclusion 246References 24611 Taxing Public Leasehold Land in Transition Countries 249Yu-Hung HongIntroduction 249Public leasehold systems 250Land ownership and taxation 251Land rent, property tax and tax incidence 256Valuing public leasehold for tax purposes 260Conclusions 261References 26312 Property Tax and Informal Property: The Challenge of Third World Cities 265Martim Smolka and Claudia M. De CesareIntroduction 265The phenomenon of informal land occupations 266Property tax performance in cities withextensive informality 271The property tax as a tool for reducing informality 278Conclusion 283References 28413 Non-market Value and Hybrid Approaches to Property Taxation 287William J. McCluskey and Riël FranzsenIntroduction 287Non-market valuation approaches 287Other non-value approaches 293Hybrid alternatives that use a form of value as the basis for the property tax 293Flat-rate taxes 301Conclusions 303References 30314 Computer Assisted Mass Appraisal and the Property Tax 307William J. McCluskey, Peadar Davis, Michael McCord, David McIlhatton and Martin HaranIntroduction 307Concepts of CAMA and quality control issues 309Mass appraisal techniques 315Case study: MRA modelling 326Conclusions 333References 33415 Geographic Information Systems and the Importance of Location: Integrating Property and Place for Better Informed Decision Making 339David McIlhatton, Michael McCord, Peadar Davis and Martin HaranIntroduction 339Conclusions 355References 356Index 359

“This volume would be a nice supplement to a graduate public revenue or public finance course. Summing Up: Highly recommended.  Graduate students, researchers, and faculty.”  (Choice, 1 July  2013)