Final answer:
Local governments calculate property taxes based on an assessed value of real estate held by individuals or corporations, applying a proportional rate. These taxes fund local services but can be controversial, leading to legislative caps and limits on tax rates and reassessments.
Step-by-step explanation:
Local governments calculate the amount of taxes to levy against property owners based on the value of their property, which can include houses, gardens, mills, fields, vineyards, and other types of real estate. Property owners are required to make a detailed declaration of their real estate, which is then evaluated to establish a tax base. A proportional property tax rate is applied to this assessed value, which means that those with more valuable properties will typically pay more in taxes, making the system progressive in nature.
Municipal governments depend on property taxes (and sometimes sales taxes) for revenue. These taxes are calculated by assessing the fair market value of property, and while some jurisdictions might also tax business property, it's generally real estate that's subject to property tax. It's important to note that the rules and rates for property taxes can be quite diverse depending on the locality.
While property taxes are crucial for funding local services, they can be controversial and are subject to various legal or constitutional limits, such as those seen after California's Proposition 13. These measures can cap tax rates and limit the frequency of reassessment, leading to disparities in tax amounts between similar properties.