If property taxes motivate people to do anything it tends to be to take a trip to the local assessor’s office.  The Roman Empire found a way to create a more positive response to property taxes.  Augustus Caesar accomplished this through flat-rate land property taxes.  This meant that property taxes were assessed not on what a property did produce but on what it could produce.  If two properties were deemed to have the same production possibility they both paid the same amount of property taxes, even though one might actually produce more.  This incentive motivated farmers to get the maximum amount of production out of the land in their care, which in turn increased the wealth of the Empire.  How’s that for smart taxes?

Remember the legendary Roman Empire?  That’s the one whose mythical foundation started with abandoned twins, nursed by a wolf and raised by a shepherd.  It was in Rome that the world first witnessed a republic established on principles of self government.  The city thrived on its’ republic ideals and expanded into an empire to become the undisputed ruler of Italy, and ultimately the world.

The creation of a sophisticated and ground breaking property tax system was one of the milestones of the Roman Empire.  Property taxes were paid based on land value, livestock, structures, even plants and trees and all other personal property.  The United States has taken some cues from this legendary government, well, minus the wolf-nursed abandoned twins.  Many of the property tax policies in Rome have found their way into our current property tax systems.

Many companies are ill-equipped to manage property taxes effectively.  According to CFO magazine, “property tax is one of the biggest tax expenses – and the hardest to manage”. The sheer volume of jurisdictions (estimated at over 12,000 townships, counties, and states) can be overwhelming.  Companies may have property in hundreds or even thousands of jurisdictions, all with their own set up rules and filing requirements.

Several misconceptions regarding property taxes exist.  Property taxes are often viewed as fixed costs.  Receive a bill; pay a bill; nothing more.  Fair market value is equated with net book value or is based solely on a formula.  Finally, there is a fear of the unknown, a fear of making waves in the community. 

It is not a rosy picture on the jurisdiction side either.  Jurisdictions do not have the manpower or expertise to evaluate each real estate or personal property parcel individually.  Out of necessity they must employ mass appraisal processes to value all of the properties in their jurisdiction.  In Los Angeles County alone over 1.5 million personal property returns are filed annually.  You can probably double or triple that figure for the number of real estate parcels that must be managed every year.

Is property tax a pain in your company?  What steps have you taken to improve the process and minimize the pain?