(Very interesting proposition. I know some GRPers have floated the idea of making property taxes a smaller part of the tax base, and getting a local option bill passed that would allow towns to institute local income taxes instead. – promoted by eli_beckerman)
Property taxes are presently relied upon to fund more than for what they were designed to fund. Usually, property taxes are more of a tax burden to lower and middle income residents, contributing thus to the overall unfairness in the tax system. Although the larger issue of tax fairness needs to be addressed by the legislature by finding broader more progressive tax solutions, I wonder if there is an opportunity for towns and cities to make local property taxes more progressive.
Floating this idea recently to a journalist and to a local town manager, who both responded with interest, I have decided to post this note here to begin a discussion.
A progressive property tax would function similarly to a progressive income tax. Property assessed at a higher value would pay a greater tax rate per $1000 than a property assessed at a lower value. I imagine a spread between a set minimum and maximum in a given jurisdiction.
Such a program would not affect existing levy limits, and probably would not immediately affect ovrall receipts, but it might help to more fairly spread the property tax burden among property owners.
This candidate for State Representative is interested in following any discussion that follows on this subject. Is anyone aware of any jurisdictions that have set property tax rates in this manner? If so, was it successful in making the system more fair? What procedures would need to be followed to adapt this? What local and legislative processes may need to be modified? What are the downsides?
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Could it also have the effect of deterring people from purchasing higher-end property in towns that have the progressive property tax in effect? Or, perhaps more likely, slowing down new-home construction in those same towns? I dunno–just woolgathering. It certainly seems worth looking into.
BUT…
What I’d REALLY like to see is school funding disassociated from property taxes, as I suggested a few posts down. I’m pretty cynical about what our school systems teach in the first place–kids who can’t change the oil in their car, skin a deer, raise a crop of potatoes, land a bass, have no idea how to chop firewood, etc.–but the current system of funding schools based on municipal property taxes is a fucking joke–and going after charter schools wholly evades the REAL unfairness in the system (when will our candidates address THIS fundamental issue?). Anyway, go to a state-based system of funding school system and property taxes won’t even be an issue.
In any case, if you’re interested in following upon the progressive property tax idea, check out the discussion thread following this article on TPM–there are some links to what other states are doing or considering doing. You may be on to something. (I wonder, though–with current property assessments so fucked up now that we’re on the downward slope of the bubble, it could be a tricky time to introduce. I’m on the verge of buying property here in Stoughton, and the assessed value versus the asking price is freaking ridiculous).
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I was thinking that the property tax could be assessed only on the value of the property in excess of a high minimum such as $100,000.
The tax rate would have to be increased to generate the same revenue as the old rate on all value.
In our town, the wealthier people want nice amenities in the town. The less wealthy people say they can’t afford to pay the higher property taxes that would ensue. So why don’t we fix it so that the people who want the town to provide these amenities, and are willing to pay the taxes for them, be asked to pay for what they want and not burden the people who are already struggling?