MIL (or MILL)

Definition

MIL (or MILL): A mill represents one-tenth of a cent and is used in tax rate calculations to denote the amount of tax paid per dollar of assessed value. Given this usage, 1 mill equals $0.001, and property tax rates are often stated in mills.

Examples

1. Property Tax Calculation: If the property tax rate is set at 50 mills, a homeowner with an assessed property value of $100,000 would calculate their property tax as follows: \[ \text{Property Tax} = \text{Assessed Valuation} \times \left(\frac{\text{Mills}}{1000}\right) \] \[ \text{Property Tax} = $100,000 \times \left(\frac{50}{1000}\right) = $5,000 \]

2. Tax Rate Representation: A tax rate of 75 mills means that for every dollar of assessed valuation, the tax is 7.5 cents. For a house with an assessed value of $250,000: \[ \text{Property Tax} = $250,000 \times \left(\frac{75}{1000}\right) = $18,750 \]

Frequently Asked Questions

1. What is a mill rate?

   • The mill rate is the amount of tax payable per dollar of the assessed value of a property. It is calculated as the tax rate per $1,000 of assessed valuation.

2. How do I convert mills to dollars?

   • To convert mills to dollars, divide the number of mills by 1000. For example, 20 mills is equivalent to $0.020 (20/1000 = 0.020).

3. Why do tax authorities use mills?

   • Mills are used because they provide a precise way to express tax rates that are fractions of a cent per dollar of valuation, making it simpler to calculate small incremental changes in tax rates.

4. Is the mill rate the same everywhere?

   • No, mill rates vary by jurisdiction and are determined by local government authorities to meet budgetary needs and cover public services.

5. Can mill rates change annually?

   • Yes, mill rates can change annually based on local government budgets, changes in assessed property values, and voter-approved tax measures.

Related Terms with Definitions

• Assessed Valuation: The dollar value assigned to a property by a public tax assessor for purposes of taxation.
• Property Tax: A tax based on the value of real estate or other property.
• Tax Roll: The official record of taxable property within a jurisdiction, listing property, owners, and assessed valuation.
• Revenue: Income generated from taxes or other sources by the government for public-use funding.

Online References

1. Investopedia - Property Tax
2. Wikipedia - Mill (Currency)
3. IRS - Property Assessments and Property Taxes
4. National Taxpayers Union - Understanding Property Taxes

Suggested Books for Further Studies

1. “Property Taxation in the United States” by Dick Netzer

   • A comprehensive guide to understanding the complexities of property tax systems in the U.S.

2. “Public Finance and Public Policy” by Jonathan Gruber

   • Covers broader concepts in public finance, including taxation and public expenditure decision-making.

3. “The New Tax Guide for Writers, Artists, Performers, and Other Creative People” by Peter Jason Riley

   • Offers insights into various tax aspects, including property taxation, tailored to creative professionals.

Fundamentals of MIL (or MILL): Taxation Basics Quiz

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