Property taxes: truth or dare

It was hard to miss: a front-page article in a recent Boston Globe, describing a developing tax revolt in one of the East Coast’s toniest towns: Edgartown, Mass., on Martha’s Vineyard.

It seems that a number of summer residents – who collectively pay 80 percent of the town’s property taxes – have seen their property values skyrocket. The “average” house in Edgartown is now assessed at around $800,000, but some of the hoi polloi found their waterfront properties revalued as high as $17 million. Many have hired attorneys and filed abatement requests.

Local assessors respond that they were doing what law required, namely brining assessments in line with the fair market value of what the property would bring in a very hot real estate market in a tony location. Sound familiar? Similar rumblings have occurred along the Maine coast.

Wait, there’s more. To comply with Massachusetts law, which restricts property tax rate increases to 2.5 percent, the assessors lowered the mill rate: from $3.51 to $3.03 per thousand.

Excuse me? What did you say the mill rate was?

That’s right, $3.03. The property tax on an “average” $800,000 house in Edgartown is $2,424.

People in Edgartown apparently think it’s outrageous. Walter Cronkite saw his valuation go from $4 million to $6.3 million, exposing him to a local tax of $19,089.

To put this in perspective, let’s do the math.

A number of cities and towns in Maine have mill rates of at least $20 per thousand. The hypothetical owner of a house assessed at $121,200 in a municipality with a $20 tax rate will pay $2,424 in property taxes, the exact same amount as the “average” homeowner in Edgartown. Someone paying $19,089 in a town with a $20 mill rate owns property that the assessors value at $954,450, a far cry from Cronkite’s $6.3 million cottage.

While there aren’t that many residential properties in Maine, except in a few enclaves, assessed at $954,450 or higher, I know a number of small business people with their entire life savings tied up in their commercial or rental property, who are paying more than $19,000 in property taxes and trying to make a go at it.

To give a little more perspective, not many Maine towns can claim a valuation of $5.42 billion like Edgartown, but the hard reality is that many Maine citizens of modest means, to say nothing of business- men and women trying to get by, are paying considerably more in property taxes – for a lot less property – than wealthy second homeowners in one of America’s priciest ZIP codes. Some of those summer homeowners undoubtedly claim legal residence in states where there is no state income tax, meaning that the property tax is one of their biggest claims.

I heard a rumor that the Legislature has been working on comprehensive property tax relief. I suggest that the good folks in Augusta obtain the names and addresses of all Edgartown taxpayers – which are apparently available online – and send them a copy of this plan for tax relief, and, since those taxpayers seem to be so mad at Edgartown, see if we can entice them to buy property – and pay property taxes – here in Maine.

How many do you think will come?

Charles E. Gilbert III is an attorney practicing in Bangor.