CAE CAE Tax Policy and Assessment Administration 2

Question 1

What is the primary difference between a tax levy and a tax rate?

Accepted Answer

A levy is the total amount of tax to be collected; a rate is applied per unit of value

Answer

The tax levy is the total dollar amount a taxing jurisdiction needs to collect, while the tax rate is derived by dividing the levy by the total taxable assessed value.

Question 2

Which concept describes the shifting of the property tax burden from owners to tenants through higher rents?

Accepted Answer

Tax shifting

Answer

Tax shifting occurs when property owners pass along property tax increases to tenants through higher rental rates, changing who ultimately bears the tax burden.

Question 3

What is the role of the equalization factor (multiplier) in property tax administration?

Accepted Answer

It adjusts assessed values to achieve a uniform assessment level statewide

Answer

An equalization factor (state multiplier) is applied to local assessed values to bring them to a uniform percentage of market value for purposes of state aid and levy distribution.

Question 4

Which of the following best describes 'tax capitalization' in property assessment?

Accepted Answer

The reduction in market value caused by high property taxes relative to comparable properties

Answer

Tax capitalization refers to the phenomenon where higher-than-normal property taxes reduce a property's market value, as buyers discount the price to offset future tax obligations.

Question 5

What is the typical consequence of a jurisdiction having a Price-Related Differential (PRD) greater than 1.03?

Accepted Answer

Lower-value properties are over-assessed relative to higher-value properties

Answer

A PRD above 1.03 indicates regressivity, meaning lower-value properties are assessed at a higher percentage of market value than higher-value properties.

CAE - Certified Assessment Evaluator Practice Test

CAE - Certified Assessment Evaluator Practice Test

CAE CAE Tax Policy and Assessment Administration 2