Without his nearly \$2,500 credit this year, he says he couldn't afford to keep his home: "If they ever got rid of it, everybody would be gone," said the man, who insisted that he not be quoted by name discussing his finances. He acknowledged it's not fair for Burdick to pay so much more, but then added, "He should've moved here 50 years ago."

Burdick says he never seriously considered purchasing outside Baltimore, because he and his wife like city living. But the high tax rate did force him to buy a less expensive house than he otherwise would have picked. He paid \$255,000 for the home in 2008. It's now valued at \$222,000.

He's sympathetic to his retired neighbor, but says the problem with the city's property tax system is the high rate itself. If the goal is to help homeowners avoid being swamped by taxes, he said, "lower tax rates in general would do the same thing."

A concentration of benefits

Here's a simplified example of how the city's 4 percent homestead cap works: Say you buy a home worth \$100,000. At the city's current tax rate of \$2.268 per \$100 of value, you pay \$2,268 in annual property taxes. Next year the house is reassessed at \$120,000, but instead of paying 20 percent more your tax bill rises only 4 percent.

If you had owed taxes on the full \$120,000, you'd be paying an extra \$363. That untaxed amount is the homestead credit, money forgone by the city.

And if the home's value keeps rising more than 4 percent a year, the size of the credit keeps growing too. During the middle of the last decade, annual property values rose at a double-digit pace. As a result, many owners saw the size of their credit snowball.

But the homestead credit disappears after a home is sold. The new buyer pays the full bill and only begins accruing his or her own credit after the first year — assuming values rise fast enough.

To understand the effects of the homestead break, The Sun requested information from the city showing the net tax bill and any tax credits for every property in the city. Baltimore's Finance Department said it couldn't provide that level of detail because the information was essentially trapped inside an aging mainframe computer.

Using an automated process called "data scraping," The Sun instead created its own database of all 237,000 city property tax records by copying the information, one record at a time, from the individual tax records publicly available on the city's website.

In addition to revealing errors and widespread disparities, the analysis found that wealthy homeowners reap large benefits from the credit.

Nobody in the city has a larger homestead credit, in dollar terms, than John and Angelina Guerriero, who own an urban palazzo in Little Italy.

Their property tax bill this year would have been \$61,700 if they had to pay on their home's entire assessed value of \$2.6 million. Thanks to the cumulative power of the 4 percent tax cap over two decades, they owed \$12,900 instead.

Their \$48,800 tax break works out to a 79 percent discount.

State assessors say the Guerrieros' credit was computed correctly, based on a starting assessment of \$240,000 two decades ago, when the couple turned a South Exeter Street commercial garage into a residence the size of five ordinary rowhouses.

John Guerriero, who grew wealthy by building Continental Foods into a \$100 million family empire, makes no apologies for the discount. "Everybody looks at things differently," he said. "I feel like I'm entitled to the credit. I put a lot of money into the house, into the area."

Without the cap to keep a lid on taxes, Guerriero said, "I'd have to find a way to get out of it or sell the house, if it's possible." Noting that a new owner would be required to pay the full tab, he added, "I don't think anybody else would want to assume that kind of tax bill."

Harold F. Graul Jr. and his wife Mary have a 61 percent homestead discount on their 4,000-square-foot condo at the Towers at Harbor Court near downtown. This year they owed around \$12,000 of the \$31,000 property tax bill for the home, which the state says is worth \$1.3 million.

Harold Graul, whose family operates the Graul's supermarket chain, thinks he pays a fair share considering the limited city services he uses. He pointed out that Harbor Court owners pay for private trash hauling and very few have children in public schools.

"I've never asked the city for anything from my taxes," he said, "other than I drive on the streets in my car."