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November 15, 2005
Taxing (and valuing) intangibles
Why does this story remind me of the Beatles song "Taxman"? From yesterday's Washington Post - "N.H. Puts a Price on Panoramas":
The view from Brad Wilder's hillside house is a 270-degree panorama of New England high country: the rugged peak of Mount Ascutney, the reddening leaves and white-painted houses of the Connecticut River valley and -- on some lucky fall days -- migratory geese cruising by at eye level.
His vista is stunning. But you can't say it's priceless.
Wilder's view has actually been valued right down to the dollar: According to the town of Plainfield, it is worth $237,265. In 2003, town officials deemed it a bonus feature of his home, like a third bathroom or marble countertops, and ordered him to pay about $4,700 in property taxes for it.
Which left Wilder with a lot of questions.
Chief among them: How do you value a view?
Yes, valuation of intangibles is one of the accounting problems of the I-Cubed Economy (see our study Reporting Intangibles).
But valuation of property views is not such a big deal. It has been going on for a long time. For example, the Federal government gives tax breaks to people to protect the view. And various private foundations or local governments have various financial programs to protect the views. They are called a scenic easement or a conservation easement, where the owner is restricted from developing the land. There are even conservation easements for the facades of historic houses. All of these require valuation.
The irony of this story is that someone else may be getting a tax benefit for providing Mr. Wilder his (taxable) view. If he owned the land he was looking at, he might have gotten a tax break or some other financial reward for leaving it as it is.
There is a second irony in this story. The higher property values are forcing some to sell and leave. This is, of course, the same New Hampshire that boosts of no income tax and makes politicians take the no-tax pledge:
The change has been blamed in part on New Hampshire's lack of a sales tax or personal income tax, which means that property taxes bear much of the revenue burden. In recent years, the state has been pushing towns to keep their property assessments up to date so that none of this crucial revenue is missed.
One way or another, the taxman is going to get you.
Or as Justice Oliver Wendell Holmes, Jr. said, "Taxes are the prices we pay for civilized society."
Posted by Ken Jarboe at November 15, 2005 2:13 PM
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