High property taxes driving a new revolt

Many Georgia lawmakers are backing a measure to put a similar cap in the state constitution. The bill's sponsor, first-term state Rep. Edward Lindsey (R) from Atlanta, argues that it's unfair to hit homeowners with a big tax boost years before they sell their home and profit from its increased value.

"Not even the IRS is so bold as to tax people on unrealized gain," says Mr. Lindsey. "These are essentially backdoor tax increases that give government no incentive to be efficient or responsive."

Georgia school superintendents say the measure would make it more difficult to raise needed cash for the state's schools since schools would have to go to the voters for additional funds.

"The fervor for doing something about property taxes seems to be unusually high," says Herb Garrett, executive director of the Georgia School Superintendents Association.

Assessments can vary according to a community's affluence and aesthetics, such as views of mountains or lakes. Tom Thomson, leader of the "Ax the View Tax" movement in New Hampshire, objects to taxing people on intangible qualities such as a view. "It's another process of dipping into taxpayers' pockets without any legislative process, and that is taxation without representation," says Mr. Thomson, son of the late Gov. Meldrim Thomson Jr.

To be sure, higher assessments alone don't mean higher taxes. But the total tax burden on homeowners rises when local governments do not decrease the tax, or millage, rate when property values spike.

"Reassessment has been so big in many communities that local schools and governments have gotten huge revenue increases without ever having to vote on it, so they sit back and take advantage of the largesse," says South Carolina state Sen. Scott Richardson (R) of Beaufort.

But government should move carefully and try to "smooth out the bumps" of rising property values rather than initiate dramatic reform of a tax that is "basically fair," says Bill Fox, an economist at the University of Tennessee in Knoxville.

"You don't want to strangle government, but you want to make sure that government is not unduly benefiting from unique circumstances in housing prices," he says.

In the wake of the real estate boom, lawmakers in several states are pushing to keep property taxes from skyrocketing. Among the initiatives:

• Idaho: Lawmakers are mulling over eight bills limiting property taxes. One would revise the "homestead exemption," which now keeps the first $50,000 of a home's value off the tax rolls. The bill boosts that to $100,000.

• South Carolina: The legislature is now considering a rollback of property taxes, replacing them with a hike in the sales tax.

• Georgia: Many lawmakers are backing legislation that would put a similar 3 percent cap into the state constitution.

• Nevada: Protesters are gathering signatures for a citizen initiative that would require the state to refund taxpayers if state revenues rise faster than inflation. They also want to cap the growth in property tax bills at 1 percent per year.

• Connecticut: After an uproar over massive assessment hikes for lakefront properties around the state, state officials have ordered cities and towns that have seen property tax spikes to calibrate disputed assessments to "comparable" properties, based on records of recent sales.

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