I came up with that formula when arguing against a raise in the property tax. The argument for the tax was that 2% was a really low number. We should raise it to 3%.

BTW, the tax explains why businesses are often reluctant to improve their property. So, lets say you did something that improved the value of your property by $100,000. The government would start taking $2,000 from you every year. You end up paying more than the cost of the improvement in just 50%.

Businesses have to pay taxes on the labor and material to make the improvement. The state will want capital gains and property tax on the improvement.

From an accounting point of view, it is better just to let the property deteriorate. Once it becomes an eye-soar the state will pay for the clean up.

It is absurd.