Remember that assessments are merely a base used to apportion the tax burden. The tax burden is the amount that must be raised for the operation of the local and county government and the local school system.
Let us assume that the amount a municipality must raise from property taxes is $10 million. Assume also that the total of all assessments in that municipality is $200 million. In this example, a municipality would have a tax rate of $5 per hundred:
Amount to Be Raised from Property Taxes
| Total of Assessments
| = Tax Rate
|
|---|
$10 million
| $200 million
| .05 or $5.00 Per Hundred Dollars of Assessed Value
|
If the $200 million total of all assessments, on average, represents 50% of the true value of all real property in the municipality, property owners whose assessments reflect more than 50% of true value would be paying an unfair share of the burden. Conversely, property owners whose assessments reflect less than 50% of true value would not be paying their fair share of the burden.
Now, let us assume that in this same year, a revaluation was put into effect and the aggregate assessed value is now $400 million:
| Amount to Be Raised from Property Taxes | Total of Assessments | = Tax Rate
|
|---|
| $10 Million | $400 Million | .025 or $2.50 Per Dollars of Assessed Value |
Raising the assessments to true value does not affect the amount to be raised by taxes. That is determined independently through the budget process. A revaluation does not raise revenue. It is revenue-neutral.