Homeowners in financially struggling cities and towns might want to think twice about bashing the property tax. It's the delivery of local services that will suffer, as local governments become more reliant on state governments that are less in tune with local needs, according to The Property Tax and Local Autonomy.
The new volume, edited by Michael E. Bell, David Brunori, and Joan Youngman -- a follow- up to Erosion of the Property Tax Base, which included papers from a property tax policy roundtable co-sponsored by the Lincoln Institute and the George Washington Institute of Public Policy -- examines the consequences of a declining property tax base and the ability of local governments to fulfill the functions preferred by local residents, whether schools, parks, or public works.
The property tax has long been viewed is the most efficient and effective means for raising revenue to fund local government services. No other sources of revenue can ensure local autonomy, a critical factor in American government since the beginning of the republic. Yet the property tax in the United States has been under siege for decades. The connect to local government autonomy was important, the editors say, because the American political landscape is dominated by the belief that localities are critical to governance. Local autonomy—the ability of local government to undertake activities that reflect the preferences of local residents—requires a source of locally raised revenue that local government can use as it sees fit. Local autonomy is the underlying premise of the efficiency gains presumably derived from the theory of fiscal federalism. It also stimulates civic engagement and is the basis of local democracy and accountability. If the property tax continues to play a reduced role, this research suggests, local governments will be forced to rely even more heavily on state political institutions. And if that happens, the overall system will likely be less efficient and less politically responsive.