Property Tax Relief

Report Outline
Signs of Taxpayer Unrest
Evolution of Property Taxes
Outlook for Local Taxation
Special Focus

Signs of Taxpayer Unrest

Movement to Lower Real Estate Levies

The property tax is perhaps the least popular of all taxes. In a recent poll conducted by the Advisory Commission on Intergovernmental Relations 33 per cent of the people questioned said their property taxes were unfair. Economists and taxpayers across the country agree that the system is badly in need of reform. Discontent over assessment practices and rising taxes is currently the focus of political debate in California, Massachusetts and several other states. In such cities as Philadelphia property tax relief has emerged as a national “grass-roots” issue. Californians, in statewide voting likely to influence the rest of the nation, will decide June 6 whether to impose drastic limits on property taxation.

Taxes on property — chiefly on real estate — are the principal sources of local revenues for such essential services as public schools and police protection. They accounted for 81 per cent of the $67.5 billion that local governments throughout America collected from taxpayers in 1976, the latest year for which such figures have been compiled by the Census Bureau. Property taxes rose from a yearly average of $168 per person in 1970 to $242 in 1975, the bureau further reported. As a national average, the share of personal income taken by these taxes has also been increasing. The Conference Board, an independent economics research organization, estimated that in 1977 the major state and local taxes (income, sales and property) siphoned off 9 per cent of Americans' income; federal taxes took about 14 per cent.

Although protests against property taxes have become a familiar feature of the American scene, local governments have rarely been in a position to push for tax cuts. But since 1970, most states have passed laws enabling municipal jurisdictions to reduce residential taxes. And recent local budget surpluses — in some cases the result of increased federal revenue sharing — have made tax reductions inevitable. Urban experts say that New York City's widely publicized battle against bankruptcy has averted public attention from the fact that many municipal treasuries are fatter than they have been in years.