Manage the property tax levy responsibly
The impact of an economic crisis in the property tax levy usually occurs with a time lag. Valuations take time to follow economic downturns, and assessments to calculate the tax levy may not align with new property values. Given the nature of the COVID-19 crisis, property values, particularly for residential property, may be less severely affected than during the 2008 Great Recession.
In that case, property taxes may become a source of revenue to compensate for the steep falls in other taxes such as sales tax. Because of the separate timing of the property tax levy, it is important to evaluate its expected impact before seeing whether it is possible (and advisable) to use the levy as a countercyclical revenue source and strategically allocate the forthcoming resources.
ASSESSMENT
Some questions to guide your thinking
- When is the impact on the tax property levy likely to occur?
- How will this impact compare with that from other revenue sources?
- Is there room to increase the property tax levy without hurting economic recovery?
- Can this new levy become a tool to create a more diversified tax base?
- What is the best use of the property tax levy to promote economic recovery?
Reading
Acknowledging state limits on the property tax (and understanding the arguments against these limits)
Center on Budget and Policy Priorities 10 minutes
This report argues that state property tax limits, combined with decreased aid from state and federal sources, has caused local governments to cut services or turn to less desirable forms of revenue such as sales tax.
- A study of four states (Michigan, Oregon, Massachusetts, and New York) finds that state property tax limits have negative consequences.
- Pages 16-20 summarize the main arguments against property tax limits.
Reading
Understanding property tax ranges across the US
Urban Institute 20 minutes
How do property tax rates vary across the United States? This 2013 brief examines differences by county and state, noting large variations across jurisdictions.
- Most US counties have levy about $1000 per homeowner and below 1 percent of the house values.
- Pages 4-8 compare property tax by county.
Reading
Studying the strengths and weaknesses of property taxes
ICMA / George Washington Institute of Public Policy 15 minutes
This report is an in-depth review of property tax history and trends, policy issues, incidence of the tax in the market, and variations across local governments.
- The property tax is a complex policy tool and city leaders should understand both its strengths and weaknesses.
- A summary of US trends between 1953 and 2002 can be found on pages 26-29.
- A vital question is who bears the impact of the tax (discussed on pages 59-63).
Reading
Acknowledging state limits on the property tax (and understanding the arguments against these limits)
This report argues that state property tax limits, combined with decreased aid from …
Reading
Understanding property tax ranges across the US
How do property tax rates vary across the United States? This 2013 brief examines …
Reading
Studying the strengths and weaknesses of property taxes
This report is an in-depth review of property tax history and trends, policy issues,…