Property Tax Reform

Report Outline
Mounting Complaints About Property Tax
Origins and Growth of Property Taxation
Proposals to Minimize Inequities of Tax
Special Focus

Mounting Complaints About Property Tax

All taxes are unpopular, but the property tax may be the least popular of any. Walter W. Heller, chairman of the President's Council of Economic Advisers from 1961 to 1964, has called it the “sick giant of our tax system.” Homeowners, business executives, and even government officials agree that it is often unfair and burdensome, and badly in need of overhaul. Yet the property tax is, and is likely to remain, the principal source of local revenue for such essential services as public education. In many communities the levies have become unbearably high but cannot keep abreast of the rising costs of vital services. The communities can expect little help from the states, which themselves are pleading virtual bankruptcy and in turn are asking the federal government to share its revenue.

There are indications that property tax reform will emerge as a national political issue in 1971. Ralph Nader, the consumer advocate, has been working for months to encourage private groups of citizens and taxpayers to band together and demand reform of the property assessment system, which he has described as “nothing short of scandalous.” Sen. Edmund S. Muskie (D Maine), as chairman of the Senate Intergovernmental Relations Subcommittee, plans to hold hearings in various parts of the country during the year to determine if Congress should approve legislation governing local property taxes. Because Muskie is considered the leading contender for the Democratic presidential nomination in 1972, the hearings are bound to attract attention.

The inequities of the property tax are legion. Assessment levels and tax rates vary widely not only from state to state but also within a single state. Business or industrial property and idle land often are underassessed and undertaxed in comparison with residential property. Some property is not taxed at all—principally that owned by churches, government, educational institutions and non-profit organizations. In addition, the tax falls more heavily on poor people, whether they own their dwellings or rent them, than on those with higher incomes.