For example, Florida's assessment limitation, which only applies to homesteaded properties, restricts increases in assessment to the lower of 3 percent and the change in the Consumer Price Index. On the other hand, Arizona, which adopted an assessment increase limit in 1980, has a more complicated limitation. The system works as follows. Effect of Limitations on Property Taxes By themselves, limitations on increases in assessments will not necessarily control the growth in property taxes. Property taxes are the product of the property tax rate and the taxable value, and the assessment increase limitation only affects the taxable value.
Local governments can simply raise the property tax rate in order to increase property tax revenue.
Much of the criticism surrounding the property tax and most of the focus on property tax reform is associated with the premise that identical properties, i. e., properties with the same market value, should be assessed at the same value but frequently are not. Acquisition value is based on the premise that properties with the same historic purchase price should be assessed at the same value. Given that the property tax is a tax on wealth, fair market value should be the basis for equal treatment. Thus, we focus on the disparities in the ratio of assessed value to market value that arise as a result of acquisition value assessment. The Assessment Limitation in California There is little research that addresses the issue of who benefits and who loses from a property tax assessment freeze, and the studies we identified focus on California's Proposition 13.