High property taxes driving a new revolt
Several states eye moves to cap tax growth after property boom.
In Orford, N.H., a tin-roofed hunting cabin worth $10,000 was recently assessed at $200,000, just for its mountain view. Taxes on the cabin and its outhouse skyrocketed.Skip to next paragraph
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Around Lake Tahoe, along the California-Nevada border, property taxes have shot up 135 percent in the past four years.
Residents of Beaufort, S.C., pay $17 million more in property taxes today than in 2000.
Welcome to the flip side of the real estate boom. Years of rising home values have boosted property taxes steadily. Now, homeowners across the United States are fighting back.
"Real estate growth and real estate boom seem to be happening all over the country and [property-tax revolt] is an inevitable consequence," says Roger Sherman, a property tax expert in Boise, Idaho.
This year, legislative proposals, citizen initiatives, and lawsuits are on the agenda in at least 20 states. These new efforts reflect both residents' distrust of how their property tax dollars are being spent and concerns that rising assessments are driving working-class people out of popular towns and cities.
Tax caps are not new. California's Prop. 13 initiative in 1978 capped annual tax assessment increases at 2 percent until a property is sold, a law that is still on the books. Nevertheless, the steady rise in home values has meant that local and state governments are increasingly reliant on property taxes as their No. 1 revenue stream. Last year, those governments collected $339 billion, according to the Census Bureau, some $2,750 for every home in America.
This perceived shift of the tax burden onto residential properties is behind the various tax revolts. It also doesn't help that often tax bills reflecting double-digit increases are mailed out at Christmastime - notices that affect older and long-term homeowners the most.
"The intensity of outrage has not been this high since Prop. 13's heyday," says Pete Sepp, spokesman for the director of the National Taxpayers Union in Alexandria, Va.
Reducing property taxes, however, may curtail local governments' ability to raise money for schools and services, some critics say.
Others don't see what all the fuss is about. Since the property tax is determined and spent locally, it is the fairest of all taxes, experts say.
"You think [the property tax is] where the revolt should not come, but it does," says Helen Ladd, a property tax expert at Duke University in Durham, N.C.
Revolt is in full swing in Incline Village, Nev., on the shores of Lake Tahoe.
There, Maryanne Ingemanson's tax bill is now $80,000 a year for a 5,000-square-foot house. She and a group of residents raised $400,000 to fund a lawsuit claiming recent assessments are unfair. Last week, 17 residents won a battle against the tax assessor when an elected county board threw out the new assessments.
Of course, many believe homeowners should be glad that their homes are worth more, says Ms. Ingemanson. But many people - especially the working class and those on fixed incomes - can't always afford the new taxes and have to leave. "This runaway taxes situation is driving people from their homes," she adds.
Both chambers of South Carolina's legislature recently approved a tax-assessment cap. Any change to South Carolina's tax law, however, could not take effect until state voters pass a ballot referendum. [Editor's note: The original version mischaracterized the property-tax law in South Carolina.]