There has been a lot of talk lately in Georgia and other states about the property tax. Politicians have routinely called for dramatic limitations or even complete repeal of the tax. Politically, the property tax is an easy target; people don’t like taxes in general and property taxes in particular.

But before you let your political leaders do anything so drastic with the property tax you should keep a few things in mind. The property tax is the ideal way to raise revenue for local government services. If a local government has control over its property tax, the local citizens determine the level of services (how many police officers and libraries) and the level of taxes (how much are they willing to pay) for those services. The property tax makes local government efficient (the demands of the public can be matched with the tax burdens they are willing to bear). The property tax also helps make local governance more responsive to the citizens. If local political leaders are charged with raising local taxes to pay for local services, the citizens can hold them accountable.

 

Without a strong property tax, funding and decision making over local services is shifted to the state. When the state is paying the bills, the state politicians and bureaucrats set government policy. That erodes local government authority and makes providing local services less efficient and less responsive to the citizens.

 

No one likes paying taxes. But the property tax is very different than sales and income taxes. The property tax is capitalized into the value of your home. That is generally a negative. But because the revenue is spent locally, the services are also capitalized into the value of your home. That is, your house is worth more because of the services being provided. If your roads are paved, if the police are on duty, the libraries are open, and someone answers 911 if you call – your house will be worth more.

 

That is not to say there are no problems with the property tax. During times of real estate inflation the property tax falls particularly hard on the poor and those on fixed incomes. But there are many effective methods for providing relief to low and fixed income homeowners. There is no reason to radically change the property tax system. Indeed, doing so will significantly reduce local government ability to efficiently and responsively provide services demanded by the citizens.

About the Author
David Brunori is a Research Professor of Public Policy at The George Washington University where he teaches courses in state and local public finance, administrative law, and fiscal federalism. He is also Contributing Editor of State Tax Notes magazine and the author of The Politics of State Taxation, a weekly column focusing on state tax and budget politics. He edited The Future of State Taxation, and has published articles in the National Tax Journal and the State and Local Government Review. His book, State Tax Policy: a Political Perspective, won the 2001 Choice Award for the best public finance book. He has also authored Local Tax Policy: A Federalist Perspective. He has served as an appellate trial attorney with the Tax Division of the United States Department of Justice and practiced with a Washington DC law firm. He was a David C. Lincoln Fellow at the Lincoln Institute of Land Policy.