Reduction of Tax Burdens on Real Estate

December 17, 1935

Report Outline
Dependence on Property Tax During Depression
Extent and Character of Tax Limitation Laws
Opposing Views on Desirability of Tax Limits
Movement to Exempt Property from Taxation
Defects in Existing Real Estate Tax Systems

Dependence on Property Tax During Depression

Drastic Curtailment of Revenues of Local Governments

By tapping new sources of taxable wealth and increasing the rates of existing non-property taxes, state governments have attempted during the depression to correct inequities in their tax systems resulting from the decline in income from property. Local governments, however, have continued to depend on the general property tax for upwards of 90 per cent of their tax revenues. Two significant consequences have attended the failure of local governments to diversify tax sources during the depression. First, local revenues have been drastically reduced. Second, property-owning groups have made organized efforts to relieve the tax burden on real estate through the adoption of constitutional or statutory provisions limiting property tax rates or exempting homesteads from taxation.

Expenditures of local governments in 1935 are estimated at about 20 per cent, or $1,250,000; 000, less than in the peak year of 1930. “The obvious cause of the decline,” according to Lent D. Upson, director of the Detroit Bureau of Municipal Research, “has been the firm reliance of local government for income upon ad valorem taxation.” Upson reports that although assessed values have been reduced since 1929, this reduction has been partly compensated for by an increase in tax rates, the amount of property taxes levied having held “fairly steady throughout the depression.” Thus, the reduced incomes and expenditures of local governments have been the result of unpaid, rather than of lower, taxes. Property tax delinquency reached its peak early in 1934, when more than 20 per cent of total state and local levies for the year 1932–1933 became delinquent.

The curtailment of the revenues of local governments resulting from continued dependence on property taxation has made necessary reductions in services and salaries, payment in scrip or warrants, and in some instances defaults on bonded debt. A further consequence has been an accentuation of the trend toward state centralization because of the inability of local governments to support local services.

ISSUE TRACKER for Related Reports
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Apr. 02, 1959  State Tax Problems
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Aug. 14, 1957  Fast Tax Write-Offs
Apr. 10, 1957  Federal Payments in Lieu of Taxes
Sep. 12, 1956  Corporation Profits and Taxes in Prosperity
Mar. 16, 1954  Shares in Tax Relief
Nov. 21, 1953  Revision of Excise Taxes
Mar. 19, 1953  Federal-State Tax Relations
Oct. 01, 1952  European Taxes and Tax Evasion
Nov. 03, 1950  Excess Profits Tax
Feb. 01, 1950  Tax Loopholes
Jun. 04, 1949  Excise Taxes
Oct. 27, 1948  Postwar Sales Taxes
Aug. 29, 1947  Taxation of Family Income
Apr. 09, 1947  Income Tax Relief
Jan. 11, 1946  Taxation of Cooperatives
Oct. 16, 1945  Federal Taxes on Business
May 08, 1944  Postwar Taxes
Sep. 20, 1943  Sales Taxes
Dec. 05, 1941  New Taxes for Defense
Apr. 05, 1941  Taxation for National Defense
Feb. 28, 1941  Taxation of Alcoholic Beverages
Jan. 11, 1941  Exemptions from Taxation
Dec. 04, 1940  Federal Taxes and Defense Financing
Feb. 01, 1940  Sharing of Tax Revenues
Feb. 02, 1939  Turnover Taxes in the States
Nov. 05, 1937  Broadening of the Income-Tax Base
Jun. 17, 1937  Exemptions from Income Taxation
Apr. 05, 1937  Coordination of Federal and State Tax Systems
Dec. 19, 1936  Revision of Federal Tax on Capital Gains
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Mar. 19, 1936  Taxation of Undistributed Corporate Profits
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May 21, 1935  Comparative Tax Burdens in America and Britain
Feb. 01, 1935  Federal Taxation of Corporations
Nov. 27, 1934  Elimination of Conflicts in Taxation
Jul. 25, 1933  Taxation of Excess Profits
Jan. 25, 1933  Tax Burdens and Tax-Free Securities
Nov. 23, 1932  The Beer Tax and the Sales Tax
Dec. 19, 1931  Sales Taxes: Federal, State, and Foreign
Sep. 18, 1931  Death Taxes and the Concentration of Wealth
Mar. 18, 1931  Federal Taxation of Large Incomes
Jan. 10, 1931  Taxation of Capital Gains
Nov. 09, 1929  Federal Tax Reduction-1930
Aug. 08, 1927  Federal Tax Reduction—1928
Sep. 27, 1926  Tax Reduction and the Public Debt
Jan. 16, 1926  Taxation of Estates and Inheritances
Nov. 07, 1925  Federal Taxation of Small Incomes
Nov. 28, 1924  Social, Fiscal and Legal Aspects of the Inheritance Tax
Apr. 07, 1924  Causes and Effects of the Tax Return Blockade
Dec. 12, 1923  Tax Exempt Securities
Dec. 10, 1923  Taxation
Real Estate
State and Local Taxes
State, Local, and Intergovernmental Relations