Tax rates are driven by which factors?

• A. The number of parcels in the jurisdiction.
• B. The age of the property and its location.
• C. The levy amount and total assessed value.
• D. The market value of all properties.

Answer: (C)

Tax rates are determined by the amount of revenue that must be raised (the levy) in relation to the total assessed value of the taxable base. In practice, the rate is set so that Levy = Rate × Total Assessed Value, or rate = Levy ÷ Total Assessed Value. This means the rate moves up if the levy increases or if the total assessed value is lower, and it can move down if more value is assessed. Market value or the ages or locations of individual properties don’t set the rate by themselves; they influence a property’s assessed value, which is the base the rate applies to. For example, if the levy is $2,000,000 and the total assessed value is $400,000,000, the rate is 0.005 (5 per 1,000 dollars of assessed value). A property with a $200,000 assessed value would then owe about $1,000 in tax.