110 MASS. EXPERIMENT STATION BULLETIN 235 



Town Assessed Value Tax per Acre 



A $ ^(^(J $ 12 



B 3(J0 9 



C 250 7..50 



Thus on land of the same use and same sale value taxes may vary (iO per cent. 



A further cause of undervaluation has already been suggested in the dis- 

 cussion of appraisal. Assessed values of both farm and city real estate lag 

 behind sales values so that average assessed values are usually below sales 

 values at any given time. In addition, increases in sales values are not fol- 

 lowed by immediate increases in assessed values. For one reason, assess- 

 ments can not be expected to follow every speculative real estate boom. An- 

 other reason is that assessments are changed only once each year, giving a 

 lag of at least a year between a general increase in market values and a sim- 

 ilar increase in assessed values. In actual practice this lag is from two to 

 five years depending upon the city or town. In small towns the lag is longer 

 than in the larger towns and cities. 



Apparently assessed valuations of botli farm and city property run closer 

 to earnings than to sale value. During the past twelve years the increase of 

 60 per cent in assessed values of city real estate has been about equal to the 

 increase in rents paid for residence purposes. During the same period, in- 

 creases in assessed values of farm lands have been greatest in the market 

 garden, orchard and tobacco raising towns where gross returns per acre have 

 increased most. For the towns in which farm management surveys have been 

 made, assessed valuations of real estate have increased most in towns show- 

 ing the largest farm incomes. It seems probable that failure to increase 

 valuations in many agricultural towns can be traced to continued low jjrofits 

 in farming even where sales values may have increased due to the demand for 

 summer homes. Apparently there is considerable justification for assessing 

 below sale value in such cases. 



One case in which assessed values bear no relation to either sale value or 

 earnings is where real estate values are falling. Assessors are interested 

 primarily in increasing valuations, and consequently assessments are not re- 

 duced in proportion to a decline in market value, nor are they reduced at the 

 time such decline occurs. In many cases market values fall below assessed 

 valuations before there is a reduction in assessment. This is true in decad- 

 ent portions of cities as well as in many small towns. Frequent revaluation 

 is needed in such sections. 



Intentional Underassessment. 



Aside from the reasons already mentioned, farm real estate and other prop- 

 erty in small towns are often intentionally underassessed. Many public 

 spirited assessors attempt to keep assessments low in the belief that the pos- 

 sibility of a high tax rate will make taxpayers careful in voting appropria- 

 tions at the annual town meeting. The average property owner compares his 

 tax rate with that of a neighboring town instead of comparing his taxes with 

 the taxes on similar property in the other town. Granted that high tax rates 

 resulting from low assessments do effect a reduction in expenditures, the re- 

 sults do not excuse illegal valuations. 



Underassessment is common also in towns where the total assessed valua- 

 tion is low, since state aid for schools and roads is made on the basis of 

 equalized assessed valuation and local expenditures. By means of a high tax 

 rate and low valuations, some towns have been able to obtain more state money 



