Imagine, if you will, Tinyville, a community of only ten houses. All ten houses were the same size and style, built at the same time on similarly-sized lots, using similar architectural drawings and building materials, each with comparable views and amenities, and each sold to its initial owner for the same price, $ 250,000. Assuming the fair market value of each of these houses was $ 250,000, (because after a reasonable amount of time that's the price at which the sellers and buyers had meetings of the minds, neither being under duress,) Tinyville's tax assessor valued each property at $ 250,000 , resulting in an underlying total property value of $ 2.5M for all of Tinyville.
Like any municipality, Tinyville has expenses: police & fire departments, schools & libraries, water & sewer, sanitation workers, judges & clerks, engineers & inspectors, tax assessors & collectors, officials, and secretaries. To keep the … Read More