Growing up in Wisconsin and now living in Illinois, I have become accustomed to cold winters (note that becoming “accustomed” should not imply that I necessarily am fond of them). As I sit here in July, it is almost impossible to fathom turning the furnace on, but in January you can’t live without it. What if property taxes were based on the number and sizes of your furnaces?

In 1662, England tried to make a correlation between hearths (a precursor to furnaces) and property taxes. In an attempt to establish a cohesive and fair system for valuing every property, they introduced a new property tax known as the “Hearth Tax”. It was simple in that its sole factor for establishing value was based on one aspect, the number of hearths (and the size of those hearths) in each home. A small home might have only one hearth in the main room, while a larger home would have several. They would be valued accordingly.

The hearth method of property taxation did bring some unity to how buildings were assessed, however it turned out to be widely hated by the public. Surprisingly, it had a seven year run before being phased out. Imagine how enjoyable it would be to live in the colder regions of England. I wonder if the purchase of heavy blankets would have been considered a tax planning strategy.

A new Robin Hood movie, starring Russell Crowe and directed by Ridley Scott is being released in early May.  It will probably be a blockbuster and I have to admit I am very interested in seeing it.  Dozens of movies and television shows have been made about Robin Hood.  In 1938, “The Adventures of Robin Hood” starring Errol Flynn won three Oscars.  Who could forget the 1973 animated Disney version where Robin Hood is played by a fox?  Sean Connery and Audrey Hepburn starred in a 1976 version called “Robin and Marian”.  Who would like to forget the 1993 spoof, “Robin Hood, Men in Tights”?  Also on the forgettable list are the 1991 “Prince of Thieves” with Kevin Costner (what a horrible accent!), “Robin Hood and the Sorcerer”, “Robin Hood and his Merrie Men”, “Robin Hood of the Pecos”, “Robin of Lockslay” and even “Robin of Texas” (who would have guessed that one?).  The list goes on and on.

Why the fascination with Robin Hood?  The story of Robin Hood has captivated us for centuries.  While the earliest text about Robin Hood is in a ballad from 1450, there are hints and allusions recounting his exploits from as early as the 13^th century.  None of these are historical records.  In fact, we aren’t even sure if he is a real or made up character.  The setting of Robin Hood’s life is presumed to be in the late twelfth century of England.  King John, who ruled at the time, was corrupt and taxed his people with seemingly no restraint.  Perhaps it was hatred for King John that first promoted the legends of Robin Hood.  Hearers of the adventures found themselves dreaming of Sherwood Forest and banding together against the corrupt Sheriff of Nottingham, who carried out heavy handed collection of the oppressive taxes.

Eventually, the English lords grew tired of King John’s incompetence and his heavy handed taxation.  They gathered an army, marched into London and forced him to sign the Magna Carta (I’m pretty sure that Robin Hood was not with them, although his stories may have been in their minds).  The Magna Carta limited the Kings’ power and prevented him from collecting new taxes without consent.  The actions of the English lords were a firm stance against the Kings’ ability to tax his people without restraint and became a milestone in the evolution of taxation.

Whether Robin Hood was real or not, people have been drawn to the legend; one that revolves around stealing from the rich to help the poor – or more specifically, stealing from the corrupt government that was oppressing people with unreasonable property taxes and redistributing those overpaid taxes back to the taxpayers.  It speaks to our human desire to be treated fairly (specifically when it comes to taxation).  It was an early form of tax reform, albeit unconventional.

Most of us are familiar with the saying “What happens in Vegas, stays in Vegas”.  This advertising slogan was adopted by the Las Vegas Convention and Visitors Authority in 2002, after their decision to shed the family image.  It worked!  Most of us immediately know the slogan and relate it back to Las Vegas (if the “Vegas” part didn’t already give it away).  Movies like “What happens in Vegas” and more recently “Hangover” reinforce the point that “What happens in Vegas, stays in Vegas”.

The story of “What happens in Vegas” (2007) revolves around two strangers who wake up to discover that they have gotten married after a night on the town and one of them has won a huge jackpot.  Neither can remember all the details.  “Hangover” (2009), which is along the same line, revolves around a group of guys who go to Vegas for a bachelor party and wake up to find that they lost the groom.  Again, none of them can remember what happened the night before.

So how does this relate to property taxes?  Great question!  Let’s start with the property tax process for real estate in Las Vegas.  The tax year officially starts on July 1st.  In December, assessment notices are sent.  Appeals on those assessments are normally heard January through March of the following year.  In other words, the completion of values for real estate can take up to 9 months.  When you are articulating why you want a reduction in value, you have to rely on what you may have been thinking 6-9 months earlier.  It is kind of confusing…. like trying to remember what happened after a night on the town in Las Vegas.

I wonder how well this methodology worked right before the recent real estate crash.  From the time the valuation process began in July, 2007, to the time the last appeals were heard in March of 2008 a lot had changed.  Real estate values had plummeted.  In mid-2007 would anyone have been able to accurately estimate what would happen to those real estate values?  If so, I recommend they find the nearest casino and begin betting.  In fact, they need to seriously consider moving to Las Vegas.

When it comes to property taxes, it may be a good thing that “What Happens in Vegas, Stays in Vegas”.

War is hell!  This often repeated statement is thought to have originated in a speech given by General Sherman during the Civil War.  War IS hell, but is it also a time to ponder enacting a Federal property tax?  Well it was in at least two instances.

In 1798 we had an “Undeclared War with France” after they captured hundreds of US merchant vessels.  In an effort to fund the “war” Congress passed a national property tax.  Property was divided into three categories:  houses over $100, land and houses under $100, and slaves.  Assessors in each of the 16 states were authorized to carry out the property tax.  Values were established, taxes were collected and the war ended in 1800 (yes, contrary to what you might think we are no longer at war with France).

In 1943, three economists, commissioned by the Treasury Committee on Intergovernmental Fiscal Relations, wrote a proposal to modernize property taxation.  They recommended dozens of reforms to centralize and standardize property assessment at a Federal level.

World War II had changed people’s opinions on taxation.  People, in general, were motivated to contribute to the war effort at all levels.  The Revenue Act of 1942 forced most workers to pay income tax for the first time and still opinion polls consistently showed 85-90% of people thought the new taxes were fair.  Property taxes weren’t quite as popular, though, because they didn’t go directly to the war effort.  This, coupled with overwhelming disagreements in Congress, killed the idea of a Federal property tax.  War is not the best solution.  A Federal property tax probably isn’t either.