What does the term 'Ad Valorem' mean?

The term 'Ad Valorem' is derived from Latin and translates directly to "according to value." This principle is commonly applied in the context of taxation, where property taxes are assessed based on the market value of the property. In this system, the tax amount is proportionate to the value of the asset, ensuring that individuals or businesses pay taxes reflective of what their property is worth. Understanding this concept is fundamental in the assessment of personal property, as it directly relates to how values are assigned and measured for tax purposes.