Property Tax Isn't a Tax on Unrealized Gains

Posted by the Canterbury Democratic Town Committee

A post is circulating on Facebook this week that compares property taxes to taxing unrealized stock gains. It's getting shared widely (et tu COPY & PASTE this to Your page?). It touches on a real frustration — nobody likes paying more in taxes — but it gets the fundamental mechanics of property tax wrong. That misinformation is worth correcting.

What property tax actually is

Property tax is not a tax on a gain. It is a cost-sharing mechanism. Every year, Canterbury has to pay for roads, schools, fire protection, emergency services, and town administration. Those costs are real, and someone has to cover them. Property tax is simply how we divide that bill among property owners — proportional to the value of what each owner holds in town.

Here's how it works in practice. The town sets a budget — the total it needs to operate. That total is divided by the assessed value of all property in Canterbury combined (called the Grand List). The result is the mill rate. Your tax bill is your property's assessed value multiplied by the mill rate.

If property values across town go up proportionally in a revaluation, the Grand List grows. If the budget stays flat, the mill rate goes down to compensate, and your tax bill doesn't automatically increase. What drives tax increases is the budget — what services actually cost — not the valuation by itself. The two are connected but they are not the same thing.

The stock comparison doesn't hold

Income tax and capital gains tax exist to tax what you earn or realize as profit. Property tax exists to fund what you use — the road in front of your house, the fire truck that comes when you call, the schools your children or your neighbors' children attend.

If you don't sell your stock, you haven't used any shared resource. If you live in Canterbury, you use shared resources every day. Those resources cost money. Property tax is how residents pay their share of those costs. That's it.

Your assessment going up doesn't mean the town collected a windfall. It means your share of the collective cost shifted slightly relative to other properties. If your house gained value faster than the average, your proportional share of the tax burden increases. If it gained value slower, your share decreases. That's the point of periodic revaluation — to keep the distribution fair as the market changes.

Want to know why your tax bills change, check out this excellent tax analysis the BOF chair presented a few weeks ago (hint: it's due to shifting property value mixes in town and additional tax reduction programs for veterans).

"Discontinue the Assessment Valuation process immediately"

This is where the post goes from frustrating-but-understandable to genuinely harmful.

Without assessment, there is no fair way to divide the tax burden. Would we charge every property owner the same flat amount — the same for a quarter-acre lot as for a 200-acre farm? Would we freeze assessments at initial values permanently? That would mean long-time owners pay almost nothing while new buyers carry the full burden. Assessments protect fairness. Eliminating them doesn't make property tax go away. It makes it arbitrary.

On 1776

The American Revolution was about taxation without representation. In Canterbury, the budget process is fully public and democratic. Board of Finance meetings are open and posted. Board of Education meetings are open and posted. There is a formal public hearing before any budget goes to referendum. And then residents vote directly at referendum — as we've done three times this year alone. If you believe the budget is too high, those are the tools. They work. Use them.

The frustration is real. The diagnosis is wrong.

Costs are rising. Inflation hit town budgets the same way it hit household budgets. State mandates don't come with full state funding. These pressures are real, and Canterbury residents are right to pay attention to them.

But the answer to "this is hard" is not "stop assessing property" or "property tax is illegitimate." The answer is to show up, engage with the numbers, and vote. That's what self-governance looks like.

— Canterbury Democratic Town Committee