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Saturday, June 22, 2024
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Tax the Improvements, Not the Land

Dear Source,
The idea that Delegate Donna M. Christensen would ask Congress to repeal the 1936 law requiring we assess properties at real market value is not a good one. The District court has done us a great service, and, while painful, U.S. District Judge Thomas K. Moore's ruling brought this long overdue injustice to light. (See "Christensen's Bill Would Repeal Property Tax Law"). Once repealed, the V.I. government will soon be back to business as usual, fiddling with the assessments to suit their own agendas and never mind the problems they cause the taxpayers. Sen. Almando "Rocky" Liburd for some reason unclear to me is in favor of this particular status quo system so hurtful to St. John.
Native St. Johnians face the struggle of trying to keep land to pass on to their children while staving off the pressure to pay their yearly tax bills by selling to developers. The rest of us mourn the disappearance of green space because of rampant development. Would-be farmers and gardeners simply can't farm or garden because the use of lands so precious would not justify its use for agriculture.
People see their tax bills skyrocket because of the purchase or construction of multimillion dollar homes nearby. The newcomers are often quietly berated because of the side effects of their joining the community instead of welcomed as they should be. These are the side effects of our reality and Judge Moore made us think about it.
The responses by our "leaders," most visually Senator Liburd, have been either to: 1) ignore the issue, 2) throw their hands up and say they can't do anything about it, or 3) do exactly the wrong thing, while arguing with those who have suggested the right course. (See "Lawyers Say Senate Can Change Property-tax Rate").
I would like to suggest another course. First, the lawyers were right. They and others pointed out we can and should adjust the millage rate to reflect the amount we budget to be collected from whatever our total assessed value is.
Second, the judge was right. We were violating the federal law when we just tinkered with the assessments.
Third, the federal law was right. It is a good idea in any system to have good and accurate data. Using the real value of property can only be described as a good idea. A tax system based on bogus assessments is a bogus system.
The best way to see the problem is by example in extreme. I like to picture a little old lady on a beachfront property living modestly as she always has on land she or her family bought generations ago. Her dream is to pass on her land to her children and grandchildren after completing her life in her chosen modest fashion, in the house her grandfather built. The realization (by others) that her beachfront property is worth millions changes her dream into a nightmare. Now she is faced with potentially catastrophic real property tax bills. Her children can forget about having a piece of paradise. Senator Liburd and Delegate Christensen's efforts (if successful) will make that impossible. The old lady will still have the $250 homestead exemption but a tax bill of tens of thousands. Not much of a happy ending!
A solution does exist, though. We simply amend the V.I. code (which imposes the tax) to tax improvements to land but not land itself. That is it. The federal law is satisfied since the tax rate is uniform. Both commercial and residential improvements are taxed equally. The millage rate is adjustable yearly to yield the budgeted amount spread over the total assessment value. Problem solved.
The little old lady on the beach pays her yearly tax based on the real value of her modest little house and not on the million-dollar beachfront lot. She can afford to save that for the grandchildren. She won't get her puny $250 exemption. She will get fair treatment. The saving of land as green space would finally be possible in a tax-free world. The farmer would be taxed only the barn, his house and other improvements, but not the 10 acres he farms and lives on. Had he had to pay on the value of that land he couldn't afford to farm. The newcomers who build million-dollar houses pay their fair share on the value of those houses, but not on the land. Their coming will be recognized as a good thing as they take over some of the tax burden from the rest of us. Many taxpayers make the load easier to bear. Everyone wins. What is wrong with this picture? Nothing!
Candidates! What do you think? I welcome comments by our would-be leaders.
Terry Conklin
Coral Bay, St. John

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