Proposition 13, anyone?

by on April 12, 2004 at 7:55 am in Uncategorized | Permalink

Every year I get hit by a big increase in my property taxes. I pay more and get nothing in return. I am reminded by Willy Sutton’s adage that he robs banks because “that is where the money is.” Why should local governments have more money to spend, simply because our homes are more valuable? Why should real estate appraisers have so much power over our pocketbooks?

Apparently many taxpayers feel the same way I do:

More than half the states are considering new property-tax limits or cuts, says David Brunori, an expert on state and local taxes.

States are more likely to tinker with the property tax, rather than overhaul it, he says. But the unrest may signal the start of the most extensive attack on property taxes since 1978. That’s when California voters approved Proposition 13, which capped property taxes and started a nationwide tax revolt.

“Something has to be done or there’s going to be a revolution,” says Deloria Bucknell, 86, who pays $1,200 a year on her trailer home in Topsham, Maine.

Voters in Maine and Washington are expected to vote later this year on citizen-initiated measures that would slash property taxes 20% to 50%. Elsewhere, state legislatures are considering cutting rates, adding to exemptions and limiting how much assessments can rise.

Behind the discontent: higher property values.

Property-tax collections have risen an average of 5.7% annually over the past five years to a record $297 billion nationally in 2003, according to the Census Bureau. Higher home values, rate hikes and new construction caused the increase that is about twice the rate of all other state and local taxes.

Here is the full story. Here is a related account about how the taxes are scaring off would-be homeowners. Read the attached graph on property taxes as a percentage of income; in Maine and New Hampshire the figure hits a high of 4.9 percent. Alabama is lowest with 1.3 percent.

That all being said, Proposition 13 did not work out very well for the state of California. For all their vices, property taxes are a relatively decentralized source of government support. If you don’t like how the money is spent, you can move. Replacing local property taxes by state taxes ended up gutting California schools, without saving taxpayers much money in the longer run. Stay tuned…

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