Thread by @paulisci

Let's say you have a city that raises money from property tax, and the city properties have the following values (say there's a super tall building right in the middle).

Now, let's say you budget for your city, and you need to raise $50 to cover all of your spending. The total valuation is $5000, so you need $0.01 for each $1 of the valuation of each property, like follows:

Now let's say there a recession that mostly hits the big tower right in the middle, and that drives down the property value by 1/3, and everybody else stays the same. It would look like this:

You're on city council, and you think, let's keep spending the same, and raise $50 again. With $4000 in property value, you now need to tax $0.0125 per $1 of value. It'd look like this:

What's happened? Spending is the same-- but now the big tower in the middle gets a 16% tax cut, and the edge properties get a 25% tax increase! So, city council decides to cut spending by 20%, and decides it only needs $40. Taxes would look like this:

But... now city council has cut spending by 20%, and now the outlying properties keep taxes level, and the downtown tower now gets a 33% tax cut.

(The city can't run a deficit to cover the gap either -- provincial rules.)

Property taxes:🤷‍♂️