Expert: Josh - 1/29/2010

Question
Hello:

I searched online for information regarding mills.

I read the following from this URL: http://en.wikipedia.org/wiki/Mill_(currency)

Property tax

"Property taxes are also expressed in terms of mills per dollar assessed (a mill levy, known more widely in the US as a "mill rate"). For instance, with a millage rate of 5.753 mills, a $100,000 house would be taxed 575,300 mills, or $575.30. The term is often spelled "mil" when used in this context."

I believe that  the example from the site indicates per $1.00 of assessed value even though it is not indicated in the calculation, but "... in terms of mills per dollar assessed" is indicated.

Is the complete calculation as follows: 5.753 mills/$1.00 X $100,000 = 575,300 mills.
Now, convert 575,300 mills to dollars:

1 mill = $0.001

Multiply both sides by 575,300 because if 1 mill equals $0.001, then 575,300 mills should equal $574.30.

I thank you for your reply.

Answer
Kenneth

It seems that you are still not comfortable with the word "mills".

Re: "I believe that the example from the site indicates per $1.00 of assessed value even though it is not indicated in the calculation"

Ans: There is no need to show this explicitly. It is clear that a mill represents a ratio here, so it has no units. 5.753 mills is equivalent to 0.5753% or 0.5753 cent per dollar. In decimal form, people are going to write this as 0.005753, and not bother with "0.005753/1".

I prefer to look at 5.753 mill as 0.5753% (without units). As a ratio, this is the same as 5.753/1000 (whatever the unit is, it can be measured in "Euro", "British pound" or "Dollar"). I like it this way because it has universal appeal.

The alternative is to regard a "mill" as a "milli-unit" and interpret one mill as $0.001 (with units). While this usage is common, I do not favor this usage. So, you need to make up your mind which custom to follow.

I would calculate the tax for a $100,000 house based on a rate of 5.753 mills as
(5.753/1000) * 100,000 [dollar] = 575.30 [dollar].

You need to decide once and for all, if you are going to translate 1 mill as 1/1000 (i.e., 0.1%)
OR associate 1 mill directly with $0.001.