Notes From Readers: Someone Has to Pay the Tax

A collection of letters from readers of REALTOR® Magazine this month.

March 1, 2009

There’s a popular myth that if values go up, taxes will go up. The assumed proof is that it (almost) always happens that way. If that’s true, when values go down, taxes will go down "Time to Appeal?" November 2008, page 47). It doesn’t work that way.

At the municipal level, the total amount of taxes collected must be equal to the levy (budget divided by spending minus income). When the levy goes up, taxes will go up because the municipality must collect enough tax money to meet the levy. That is always true; it is independent of the amount of individual assessments. All other things being equal, assessments can be unchanged or they may double or be cut in half and the taxes collected will still be the same. The reason is that the mill rate (tax rate) is recalculated every year.

The levy is set by the municipality. The individual assessments are calculated by the assessor, then added together to obtain the total municipality assessment. The mill rate can then be calculated by dividing the levy by the total assessments.

If you can get your individual assessment down, then you will pay less in taxes. But since the total taxes collected must equal the levy, all the other properties must make up the difference. The only way to impact taxes across the board is to lower municipal spending or increase income.

Although there are different state laws, these basic concepts are likely to apply everywhere. —Peter Melone, Melone Realty and Appraisal Service, Madison, Wis.

Don’t Leave Them Hanging

Your economic outlook article ("Doing Business in 2009," January 2009, page 27) provided tips for communicating sales activity to consumers. One of those tips was to revisit "good old-fashioned door hangers." Door hangers are the worst idea I can imagine. It’s so easy for letting burglars or mischief-makers know when residents are out or away. It’s the same as letting newspapers gather on the doorstep. Instead, be security minded; spend the money on mailers.—Gussie Tipper, Weichert, REALTORS®, Greenwich, Conn.

Murphy Beds Are Pricey

Although I enjoyed your article about Murphy beds ("The Versatile Murphy Bed," January 2009, online), your pricing is way out of whack. The prices you quote are only the spring system and a bed, no front or cabinetry. I just purchased a cabinet model, nothing fancy, and it was $2,600. I’ve found that when you actually go to a showroom, the prices in some of the pricing sheets are all wrong.—Lisa Anne Landry, Prudential Verani Realty, Nashua, N.H.

Editor’s note: Thanks for your feedback, Lisa. We’ve updated the article to include pricing for cabinetry.

Perspective Would Help

I’ve read Cost vs. Value (December 2008, page 22) for several years now; very nice job. In the future, I’d find an additional bit of information extremely helpful to put the research into perspective. I’d love to see the approximate home value included in the study. Are we talking about a $20,309 kitchen remodel on a $150,000 home or a $450,000 home? In the first case, the remodel would represent spending 13.5 percent of the overall value of the home. The second would represent about 4.5 percent.—Chris Broussard, Texas Home Group, REALTORS®, Houston

Kelly Quigley

Kelly Quigley is the former managing editor of REALTOR® Magazine.