The Puzzle of Local Double Taxation: Why Do Private Community Associations Exist?
One important neglected issue is why community associations exist at all, given that they are subject to a large financial disincentive in the form of double taxation. Much as business profits are taxed both as corporate income and as individually received dividends, private community associations are also subject, if in a different way, to double taxation. Many community associations deliver common services privately that are also provided publicly in other parts of the same jurisdiction in which the community association is located. The association unit owners, however, pay twice, first in the form of private assessments to cover the costs of their own privately provided association services and second through property and other local taxes to cover the costs of the same publicly provided services elsewhere in the same jurisdiction.