IAAO 402 FINAL EXAM STUDY GUIDE
QUESTIONS AND CORRECT DETAILED
ANSWERS 2025
A $25000 homestead exemption is an example of a ________________________________.
partial exemption
Administratively, the functions of a property tax system are:
To identify and link taxable subjects (taxpayers) and taxable objects (property)
Produce tax assessments
Collect taxes
All else being equal, when taxes rise, capitalization means that:
property values fall
All of the following are common examples of shared responsibilities between governments
EXCEPT:
Property tax levy limits
Property tax valuation programs which require states to assess railroads and counties to assess
other business property.
State provided collection assistance for local sales taxes
The International Fuels Tax Agreement (IFTA)
All of the following are possible advantages of a tax increment financing EXCEPT:
New businesses may become more competitive than previously existing businesses.
Start up costs may be lessened
Development of depressed areas may be facilitated
Bonding or financial leverage may be provided
Analytical studies that provide information in a neutral, non-judgmental way are
__________________________.
positive
The _____________________ approach is purely factual without judgments.
positive
,The ________________ approach starting point includes value judgments.
normative
As a percentage of general revenue, which local governments rely most heavily on charges?
Special Districts (sewer, fire, cemetery)
Assessed value increases are more closely tied to tax and revenue increases in a
_____________________ driven system.
rate
An assessment system in which fractional ratios are applied to appraised values is
_________________.
classification
Assessment systems in which taxable value reverts to market value at time of sale are known
as _________________________________________________________.
acquisition value systems
An assessment system that underassesses residential property even though such
undersassessment is not permitted by law is providing a _____________________________.
de facto exemption
Assume that a taxpayer has appealed her or his assessment and has assembled evidence that
the assessment is relatively higher than the assessments of comparable properties, which of
the following is the most professionally responsible way to deal with the appeal?
None of the above
Assure the appellant that the assessment in question is well below the legal standard.
Assure the appellant that her or his property is valued consistently with all other properties in
its class and than granting the appeal would reduce overall valuation uniformity.
Assure the appellant that the district's mass appraisal procedures meet or exceed all legal and
professional standards.
Because some school districts have more property wealth per pupil than others, states have
developed _______________________ systems to level this playing field.
equalization
The characteristic of a tax system that reflects on the degree to which economic efficiency is
altered is _____________________________.
neutrality
,Circuit breaker tax relief
programs_______________________________________________________.
often target low income, elderly or disabled taxpayers.
Comparing state and local government revenue in 1927 to those in 2007, or any distant years
would be misleading without adjusting for _______________________________________,
_____________________________ and _________________________________________.
price inflation
population growth
economic (income) growth
A comparison of actual tax collections to tax capacity results is something called
________________________________.
tax effort
Current market value assessment systems are more concerned with the
____________________________ of the property tax.
distribution
Federalism
is_____________________________________________________________________________
___________________________________________.
a form of government in which power is constitutionally divided between a national
government and state government.
____________________________, ___________________________,
____________________________ and _______________________________ are countries
with federal systems of government.
United States
Australia
Canada
Germany
__________________________ ________________________ is a tax on consumption
(alcohol, tobacco, gambling). This is considered inelastic - people are going to buy it no matter
the cost.
Sumptuary Tax
Democracies tend to be promoted by _______________________ economic systems.
capitalist
, Describe in general terms how current property tax systems in the US differ from earlier
property tax systems.
Current systems are almost exclusively used to provide local, rather than state, revenue.
Current systems are much narrower, in that they tend to tax tangible property more than
intangible property and real property more than personal property.
Describe the major disadvantage of fractional assessment ratio (classification) systems.
Lessens system understadability
____________________________________ and _____________________________ describe
two means by which state governments restrict local governments' revenue raising authority
in your state.
spending limitations
elections or super-majority required for new taxes etc
An example of a mechanism sometimes used to temporarily relieve property tax burden is
__________________________ _______________________.
tax deferral
Exemptions often shift property taxes to less favorited property tax payers.
_________________________ is one way to prevent this type of shift without reducing taxing
district revenue.
substitute funding such as revenue sharing, state aide, user fees, or local non-property taxes.
Federalism in the US:
enables the sharing of governmental powers between states and the federal government.
Fiscal federalism:
tends to create shared responsibilities of state and federal and funding mechanisms
A form of economic incentive often used to revitalize depressed areas
is__________________________________________________.
tax increment financing
General equilibrium analysis is considered more difficult than partial equilibrium analysis
because:
it attempt to account for behavioral and other changes due to a higher tax
General revenue is all government revenue except ___________________,
_____________________, and _______________________ revenue.
QUESTIONS AND CORRECT DETAILED
ANSWERS 2025
A $25000 homestead exemption is an example of a ________________________________.
partial exemption
Administratively, the functions of a property tax system are:
To identify and link taxable subjects (taxpayers) and taxable objects (property)
Produce tax assessments
Collect taxes
All else being equal, when taxes rise, capitalization means that:
property values fall
All of the following are common examples of shared responsibilities between governments
EXCEPT:
Property tax levy limits
Property tax valuation programs which require states to assess railroads and counties to assess
other business property.
State provided collection assistance for local sales taxes
The International Fuels Tax Agreement (IFTA)
All of the following are possible advantages of a tax increment financing EXCEPT:
New businesses may become more competitive than previously existing businesses.
Start up costs may be lessened
Development of depressed areas may be facilitated
Bonding or financial leverage may be provided
Analytical studies that provide information in a neutral, non-judgmental way are
__________________________.
positive
The _____________________ approach is purely factual without judgments.
positive
,The ________________ approach starting point includes value judgments.
normative
As a percentage of general revenue, which local governments rely most heavily on charges?
Special Districts (sewer, fire, cemetery)
Assessed value increases are more closely tied to tax and revenue increases in a
_____________________ driven system.
rate
An assessment system in which fractional ratios are applied to appraised values is
_________________.
classification
Assessment systems in which taxable value reverts to market value at time of sale are known
as _________________________________________________________.
acquisition value systems
An assessment system that underassesses residential property even though such
undersassessment is not permitted by law is providing a _____________________________.
de facto exemption
Assume that a taxpayer has appealed her or his assessment and has assembled evidence that
the assessment is relatively higher than the assessments of comparable properties, which of
the following is the most professionally responsible way to deal with the appeal?
None of the above
Assure the appellant that the assessment in question is well below the legal standard.
Assure the appellant that her or his property is valued consistently with all other properties in
its class and than granting the appeal would reduce overall valuation uniformity.
Assure the appellant that the district's mass appraisal procedures meet or exceed all legal and
professional standards.
Because some school districts have more property wealth per pupil than others, states have
developed _______________________ systems to level this playing field.
equalization
The characteristic of a tax system that reflects on the degree to which economic efficiency is
altered is _____________________________.
neutrality
,Circuit breaker tax relief
programs_______________________________________________________.
often target low income, elderly or disabled taxpayers.
Comparing state and local government revenue in 1927 to those in 2007, or any distant years
would be misleading without adjusting for _______________________________________,
_____________________________ and _________________________________________.
price inflation
population growth
economic (income) growth
A comparison of actual tax collections to tax capacity results is something called
________________________________.
tax effort
Current market value assessment systems are more concerned with the
____________________________ of the property tax.
distribution
Federalism
is_____________________________________________________________________________
___________________________________________.
a form of government in which power is constitutionally divided between a national
government and state government.
____________________________, ___________________________,
____________________________ and _______________________________ are countries
with federal systems of government.
United States
Australia
Canada
Germany
__________________________ ________________________ is a tax on consumption
(alcohol, tobacco, gambling). This is considered inelastic - people are going to buy it no matter
the cost.
Sumptuary Tax
Democracies tend to be promoted by _______________________ economic systems.
capitalist
, Describe in general terms how current property tax systems in the US differ from earlier
property tax systems.
Current systems are almost exclusively used to provide local, rather than state, revenue.
Current systems are much narrower, in that they tend to tax tangible property more than
intangible property and real property more than personal property.
Describe the major disadvantage of fractional assessment ratio (classification) systems.
Lessens system understadability
____________________________________ and _____________________________ describe
two means by which state governments restrict local governments' revenue raising authority
in your state.
spending limitations
elections or super-majority required for new taxes etc
An example of a mechanism sometimes used to temporarily relieve property tax burden is
__________________________ _______________________.
tax deferral
Exemptions often shift property taxes to less favorited property tax payers.
_________________________ is one way to prevent this type of shift without reducing taxing
district revenue.
substitute funding such as revenue sharing, state aide, user fees, or local non-property taxes.
Federalism in the US:
enables the sharing of governmental powers between states and the federal government.
Fiscal federalism:
tends to create shared responsibilities of state and federal and funding mechanisms
A form of economic incentive often used to revitalize depressed areas
is__________________________________________________.
tax increment financing
General equilibrium analysis is considered more difficult than partial equilibrium analysis
because:
it attempt to account for behavioral and other changes due to a higher tax
General revenue is all government revenue except ___________________,
_____________________, and _______________________ revenue.
