Anatomy of a tax increase

To the Editor:

I have consistently heard from Town Hall that the citizenry of New Canaan should be grateful since they have done a marvelous job in lowering the mill rate* applied to the assessed valuation on our homes. They purport that this miraculous event has resulted in lower real estate taxes. Quite the opposite, they are telling the citizenry half the story.

Surprise, surprise; my taxes have increased 14.04 percent over a three-year period. Here is the rest of the story:

Although a tax reappraisal is required every five years, the October 2008 valuation process dis-regarded the web of financial stress that the local real estate market and taxpayers of New Canaan were facing. We were only allowed five minutes to make an appeal to the appraiser. The result? Excessively over-valued appraisals, allowing the town to claim and rejoice that they have held down and even reduced the mill rate.

It is a simple exercise, not quantum physics. Here is an actual example:

A resident's real estate taxes for the 2005-2006 period were $10,451.46 based upon a 2004 list assessed value of $780,600 and a combined mill rate of 13.993 (mill rate of 13.389 and sewer rate of .604).

The same resident's real estate taxes for the 2009-2010 period were $11,918.44 -- a $1,466.98 or 14.04 percent increase. The mill rate decreased to 13.351, a decrease of .642 or 4.6 percent. So this resident's taxes should have decreased by approximately $480.77 to $9,970.69 based on the prior assessed valuation. What happened? The October 2008 valuations exploded during the worst recession since the great depression. This resident's 2008 list assessed value increased to $892,700, an increase of $112,100 in assessed value or 14.36 percent.

Simple mathematics, not rocket science. The mill rate decreased 4.6% percent, but the assessed value increased 14.36 percent. So when the base increases 3.12 times more than the multiplicand decreases, the resultant is a tax increase of 14.04 percent.

*The mill rate is the tax per dollar of assessed value of property. The rate is expressed in "mills," where one mill is one-tenth of a cent ($0.001)

Roy A Abramowitz CPA