Changes to Property Assessments = Legislative Fiddling?

Breaking a state’s constitution requirement is usually frowned upon but that’s exactly what local governments in Michigan are advocating via the guise of “uniformity among taxpayers.

Proponents of these legislative changes are local governments that have unsuccessfully tried to over-assess taxpayers. They are now pushing for dramatic changes in the valuation approach of properties of all types—from “big box” stores to personal.

In and of itself, changes in tax assessments aren’t necessarily a bad thing. However, some of Michigan’s propaganda—and the resulting implications—are downright scary.

Changes in the Making

Major changes are being proposed to the Michigan General Property Tax Act. House Bill 5578 mandates that the Michigan Tax Tribunal (MTT) ignore accepted appraisal principles and valuable data in favor of them not ignoring other principles that work in the government’s favor. If the goal of the MTT is to provide an objective review of tax appeals, how can that occur if viable evidence is eliminated?

If the proposed legislation is passed, taxpayers will incur increased costs for appeals. More importantly it could violate Michigan’s constitutional requirement for uniformity among taxpayers. What then would prevent assessors from over-assessing properties all the time?

Just the facts, ma’am

When examined, some of the facts and propaganda regarding the proposed changes to the General Property Tax Act reveal legislative shadiness.

  • The Michigan Municipal League claim that “big box” store assessments show a market value of less than $25/square foot. Looking at 2015 tax values for 4 large, well-known retailers show the average State Equalized Value (SEV) was $45/square foot. If SEV = 50% of market value, as Michigan law mandates, the figures don’t add up.
  • Proponents of these legislative changes state that a company’s profitability should be considered in its property valuation, which is already covered by Michigan’s income tax. These lawmakers are trying to legitimize over-taxing companies that have challenged their over-assessments.

Tailoring Tax Laws

Michigan isn’t alone in its attempts at tailoring tax laws that have significant implications. A large number of “big box” stores in Texas are making it a practice of using the “Equal and Uniform” taxation laws to get discounts on their tax bills.

While legal, lawyers are pleading with legislators to stop tailoring tax laws to suit special interests and instead stand firm in their fight for fair treatment of taxpayers. “More and more people are talking to their legislators…getting laws passed to exempt the little niche that they’re in,” Corpus Christi lawyer Tom Wheat said.

“Every dollar big business opts out of under the Equal and Uniform Act is a dollar that local governments will have to get somewhere else,” he continued. “In other words, homeowners and small businesses who cannot afford to fight their tax valuations in court.”

While tax assessment legislation is proposed in Michigan—and all over the United States—property tax appeals continue to rise, particularly in real estate hot spots like Cook County, the state of Illinois, and Atlantic County, New Jersey.

This steady stream of property tax appeals underscores the importance of using reliable software to keep track of all of the details regarding claims.

AppealTrack’s cloud-based, multi-user software is collaborative, secure, and designed to specifically meet the needs of paralegals, attorneys, and property tax professionals.

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