Deck 11: Major Tax Structures: Property Taxes

Question 1

What is the coefficient of dispersion for residential property?

A) 20
B) 25
C) 62.5
D) Cannot be calculateD)

Answer 1

25

Question 2

Which of the following would ordinarily not be taxed in a local property tax?

A) land subdivided for residential construction
B) an apartment building
C) a shopping center
D) a private collection of valuable paintings by Picasso and Monet

Answer 2

a private collection of valuable paintings by Picasso and Monet

Question 3

Fractional assessment refers to:

A) the practice states use to divide formula funding among cities.
B) the balance of corporate profits across state jurisdictions.
C) assessing properties at less than market value for tax purposes.
D) None of the above.

Answer 3

assessing properties at less than market value for tax purposes

Question 4

Which of the following does not constitute a property tax relief measure?

A) circuit breakers
B) deferrals
C) exemptions
D) all of the above constitute property tax relief measures
Use the Following Data to Answer the Next Five Questions.
Swamp City contains the following properties:
Parcel Assessed Value Market Value
Residential
R-1 20,000 80,000
R-2 20,000 100,000
R-3 36,000 120,000
R-4 28,000 160,000
R-5 65,000 200,000
Commercial
C-1 90,000 200,000
C-2 160,000 400,000
C-3 200,000 400,000
C-4 300,000 1,000,000
C-5 800,000 2,000,000
Industrial
I-1 1,000,000 2,000,000
I-2 1,700,000 4,000,000
I-3 5,750,000 10,000,000
All property is currently taxed at 3% of assessed value.

Question 5

The selling price of a house may not be exactly equal to the correct value of the house for tax purposes. Which of the following would not be a possible reason?

A) Taxes are based on current use value.
B) The sale included items of personal property.
C) The sale was between relatives.
D) Assessors are often elected officials.

Question 6

If a city is taxing property at the maximum rate allowed and then the assessed valuation of property in the city increases, which of the following can be expected to happen if the state does not allow an increase in the property tax levy?

A) Property tax rates increase.
B) The property tax levy increases.
C) Coefficients of dispersion increase.
D) Property tax rates decrease.

Question 7

City X reassesses a portion of the property within its borders every year, on a rotating basis. This method of updating the assessment roll is referred to as:

A) annual assessment
B) proportional assessment
C) segmental assessment
D) periodic assessment

Question 8

What is the average effective tax rate on residential property?

A) .008
B) .003
C) .030
D) None of the above or cannot be calculated from the data given.

Question 9

In a traditional mass cyclical assessment system, which of the following occurs?

A) the value for a property parcel is adjusted each time the parcel is solD)
B) the value of all properties in the assessment jurisdiction will be realigned annually, according to estimated changes in the value of types of properties.
C) all properties in a jurisdiction are assessed in a single year and assessments do not change until the next reassessment year some years aheaD)
D) tax rates are frozen when property values change.

Question 10

If a city is taxing property at the maximum rate allowed and then the assessed
valuation of property in the city increases, which of the following can be expected to happen if the state does not allow an increase in the property tax levy?

A) property tax rates increase.
B) the property tax levy increases.
C) coefficients of dispersion increase.
D) property tax rates decrease.

Question 11

Which parcel has the lowest effective tax rate?

A) R-2
B) R-4
C) C-4
D) They are the same.

Question 12

"Welcome Stranger" assessment occurs when:

A) real property is assessed only at infrequent intervals, causing substantial tax increase in those reassessment years.
B) real property is revalued for tax purposes only when it is solD)
C) real property assessments increase more rapidly than prevailing property values.
D) real property is reassessed more frequently than personal property.

Question 13

Which class of property has the highest effective tax rate?

A) residential
B) commercial
C) industrial
D) They are the same for more than one class.

Question 14

A residence in Sullivan County has gross assessed value of $15,000. Its owner
qualifies for an old age exemption of $1,000 and a homestead exemption of $2,000. The property tax rate is $5.00 per $100 of assessed value. What will the property tax bill equal on this property?

A) $750
B) $700
C) $650
D) $600

Question 15

Circuit breakers may be generally preferable to exemptions as a means of property tax relief because:

A) they place costs directly on local governments.
B) they require annual reauthorization and thus allow greater control.
C) they are targeteD)
D) they link property and sales taxes.

Question 16

Tax Increment Financing zones encourage economic development by:

A) reducing or eliminating state or local taxes paid by businesses locating in the zone.
B) reserving taxes generated by a new tax base in the zone for infrastructure or other public services within the zone.
C) cutting the interest rate on private debt issued on business investment increments in the zone.
D) providing financing to help pay additional taxes when business expands in an impacted areA)

Question 17

Fractional assessment refers to:

A) the practice states use to divide formula funding among cities.
B) the balance of corporate profits across state jurisdictions.
C) assessing properties at less than market value for tax purposes.
D) None of the above.
Use the Following Data to Answer the Next Two Questions.
Hicksville has a proposed budget of $7,000,000 for the fiscal year. The city has an assessed value of $100,000,000 and will receive state aid of $100 per capita based on its 2000 census population of 15,000. Assessed value equals 25% of market value.

Question 18

Two cities are identical in all respects except City A has an assessment ratio of 100% and City B has an assessment ratio of 25%. Both cities need to raise $1,000,000 in property tax revenues. The statutory tax rates on property are:

A) higher in City A than City B)
B) higher in City B than City A)
C) identical in both cities.
D) dependent on non-property tax revenues in each.

Question 19

What is the effective tax rate in Hicksville?

A) .01375
B) .01750
C) .05500
D) .07000

Question 20

What is the nominal tax rate in Hicksville?

A) .055
B) .070
C) .085
D) .220

Question 21

The Supreme Court case Nordlinger v. Hahn tests:

A) whether local governments may levy income taxes.
B) whether acquisition cost assessment in California violates equal protection requirements in the U.S. constitution.
C) whether states may require mail order firms to collect use tax.
D) whether state bond interests must be excluded from the federal income tax.
Chapter Twelve

Question 22

A statewide property tax levy freeze:

A) would allow property tax revenue to grow as rapidly as the growth in assessed value.
B) would require that all local jurisdictions in the state have the same property tax rate.
C) would cause property tax rates to rise when assessed value increases.
D) would limit local expenditure growth to that financed by non-property tax revenue.

Question 23

The Mundane County Council has the following information concerning the upcoming fiscal year's budget:
Planned Expenditure $ 22,550,000
Sales Tax Revenue 4,000,000
Total Market Value of Property 781,250,000
User Charge Revenue 3,250,000
Income Tax Revenue 1,600,000
Miscellaneous Revenue 1,200,000
Assessment Ratio 50%
To balance the budget, the Council will set the property tax rate at:

A) $ 32.00/$100 AV
B) $ 16.00/$100 AV
C) $ 3.20/$100 AV
D) $ 1.60/$100 AV

Question 24

In a traditional mass cyclical assessment system, which of the following occurs?

A) The value for a property parcel is adjusted each time the parcel is solD)
B) The value of all properties in the assessment jurisdiction will be realigned annually, according to estimated changes in the value of types of properties.
C) All properties in a jurisdiction are assessed in a single year and assessments do not change until the next reassessment year some years aheaD)
D) Tax rates are frozen when property values change.

Question 25

Which of the following is not a reason why assessed value for a parcel of real property might not equal estimated current market value?

A) The assessor made a mistake.
B) The tax law does not define assessed value in terms of market value.
C) The state uses a mass cyclical assessment system and the assessment year is not this year.
D) None of the above-all are reasons.