tax rate (millages), michigan state school of journalism

MillagesYes, you CAN.

Joe Grimm, Michigan State University School of Journalism

What does mill mean?

Mille in French means ...

Mil in Spanish means ...

The millennium is ...

In Roman numerals, M stands for ...

So, mill means 1,000

In money, a mill is 1/1,000th of $1

Just as cent (think century) means 1/100th of $1

Property taxes

They are based on 1/1,000th of something. What?

The value of the house.

But we don’t use the full value. We use the assessed value, which is half.

Assessed value

... equals half of market value, so,

a $300,000 house is assessed at ......

Now, the mill comes in

Multiply assessed value by 1/1,000th

(OR, divide it by 1,000)

Getting to taxes

Take that house worth $300,000

Half equals $150,000

Divide by 1,000

You get ........

Multiply that by the tax rate

Tax rate

The tax rate is in mills.

Also called the “millage,” some call it the “millage rate.”

Millage rate is redundant, isn’t it?

OK, what is MY bill?

Remember our $300,000 house and 150? We will multiply 150 by the rate

Try a millage of 30 mills ........

Try 40 ........

Try 43.21 (Rates are seldom round numbers.)

You did it!

You can figure ANY house’s tax bill.

Try a $180,000 house and 48 mills.

Try $617,000 and 55.16 mills.

Kind of helpful:

We could make readers figure it out: “Each mill in taxes costs a home owner $1 for every $1,000 in assessed value.”

More helpful:

“The owner of a house worth $200,000 would pay .................... a year for this .......-mill proposal.”

We are usually given the tax rate. If we know one we can find the other.

Deep breath

Next, we will figure out how much money a tax would bring in from a whole community.

* Here’s the trick

Do not think of all those little houses with all their individual values.

Imagine the community as one BIG house with one total value.

The number gets big

But the millage stays the same.

And the math is the same.

Remember how you kicked math butt?

So now,

Imagine a town where total market value is $260 million.

What do you do first? Divide by .........

Then ..........

Just like before

Multiply by the rate. Try 60 mills.

Maybe you have a future as a tax assessor!

And now ...

Think like the mayor and figure out how high to raise taxes to buy what you need.

Say you want a pool

And the community pool costs $12 million. (It is a nice one.)

How much do you need to tax $260 million in property to get $12 million?

How much will you have to raise the tax rate, mayor?

Don’t say ‘I have no idea’

You DO!

Divide the city’s total property value in half.

Divide THAT by a thousand.

That number has to get you to the pool.

So, divide the cost by that number.

We’re almost swimming

Half of $260 million is $130 million

130,000,000 by 1,000 is 130,000

Divide $12 million by 130,000

We get 92.3. Those are mills, Ducky.

Triple check

130,000 times 92.3 mills = ?

We’re good.

Being mayor is hard!

How much would the owner of a $200,000 house have to pay for that pool?

Too much!!

What if we spread it over 10 years?

Getting the votes

We could now tell the owner of a $200,000 home that this 9.23-mill increase would cost how much per year?

Time to sell it to the voters.

In sum (math joke)With simple math, you can figure out taxes, even for really big cities.

Your job is to explain this to readers, who will think you are some kind of journo-genie.

But you’re just really smart.

% refresher - WHY?

The most interesting thing about municipal budgets is how they change.

We measure that by percentage.

Change is good

It shows how priorities shift.

It shows how income is shifting.

It shows where costs are growing.

It can predict the future.

Ask ...

Why is this expense growing?

How does that affect others?

Will taxes go up?

What will have to be cut?

Figuring % increase

Divide change by starting number.

If we go from $60,000 to $80,000, divide $20,000 by $60,000.

We get .33 or 33% - 1/3 increase

+ or - ?

Always note whether it is an increase or a decrease.