Washington, D.C. — A federal appeals court ruled Thursday that states cannot charge property taxes based on their income, saying that the method used by the U.S. Census Bureau is too dependent on how wealthy people or households file taxes.
In its decision, the U,S.
Court of Appeals for the District of Columbia Circuit said the Census Bureau should not use income-based tax rates to assess property taxes in states that do not collect them.
The ruling by the court, which hears appeals from the nation’s 11 largest counties, is likely to have a ripple effect throughout the country.
States that do collect property taxes have used a variety of methods to calculate their taxes, including a variety to take into account inflation.
The Tax Foundation, a nonpartisan Washington, DC-based think tank, estimates that the tax code is estimated to be about $3.2 trillion.
But in its ruling, the appeals court rejected the notion that using income-driven property tax rates is a bad thing.
The appeals court noted that the Tax Foundation used a methodology that relied on the federal government’s definition of what constitutes income.
The definition was that a person making more than $150,000 and married to a person who made more than that amount in the previous year should be treated as the same person.
This definition has been criticized by some economists, who argue that it unfairly treats higher-income households over lower-income ones.
“This is not a ruling that says it is OK for a state to choose income-adjusted property taxes,” said Eric M. Rosenthal, an economist at the Tax Policy Center, a Washington-based nonpartisan think tank.
“This is a ruling about the definition of income, which is not that simple.”
He said the ruling will likely have a major impact on tax collection in states such as Pennsylvania, Maryland, Wisconsin and Wisconsin, which have used income-tax-based rates to collect taxes for years.
Rosenthal said he expected that the courts would not rule in favor of the states, instead finding the Tax Commission’s methodology is too reliant on income, and the Census’ definition of taxable income too narrow.
The Tax Commission has been trying to improve its methodology, which has been used for years to calculate property tax revenue in some states, Rosenthal said.
He said the Tax Court’s ruling could force the agency to revise its methodology.
But many experts have said that tax collections would remain fairly static in the United States.
The latest data shows that the average amount of taxes collected in each state fell by $1,100 from 2010 to 2016, the first time that has happened in nearly a century.
But some economists say the Tax Council, a tax group that advocates for lower tax rates, has been underestimating the amount of revenue that states collect because it focuses on how much money they spend on legal fees and other costs associated with collecting taxes.
“If they’re going to go ahead and say, ‘No, we’re going back to the old way of collecting taxes,’ that’s going to be the end of that,” said Matthew J. Green, an assistant professor of economics at the University of Missouri-Kansas City and an expert on tax policy.
“You’re going after people who aren’t paying taxes.”
The Tax Council did not immediately respond to a request for comment.