Speakers: Alan Dornfest, Kathylnn Ireland, Thomas Atherton
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The National Conference of State Tax Judges meets annually to review recent state tax decisions, consider methods of dealing with complex tax and valuation disputes, and share experiences in case management. This meeting provides an opportunity for judges to hear and question academic experts in law, valuation, finance, and economics, and to exchange views on current legal issues facing tax courts in different states. This year’s program will feature sessions on “circuit breakers,” an important tax policy tool, and on issues and controversies involved in hotel valuation cases.
In Fresno, California’s fifth-largest city, someone who has owned a median-priced home for 11 years—the average length of ownership there—paid less than $2,000 in property taxes last year, more than $1,400 less than the new owner of an identical home, who paid more than $3,400. This disparity between the tax burden for new and longtime homeowners grew by more than 14 percent last year alone in Fresno, recently named the nation’s hottest housing market by the Los Angeles Times for its fast-rising real estate values. This tax disparity has more than tripled in Fresno over the past five years, according to the annual 50-State Property Tax Comparison Study by the Lincoln Institute of Land Policy and the Minnesota Center for Fiscal Excellence.
The 50-State Property Tax Comparison Study explores several key factors influencing property taxes, providing a comprehensive analysis of effective property tax rates—the tax paid as a percentage of market value—in 123 cities and towns in every U.S. state and Washington, DC.
Fresno is one of 29 large cities included in the report where assessment limits cap annual growth in the assessed value of individual properties, a policy that favors longtime homeowners. The faster real estate prices rise, the more assessment limits shift the tax burden to newer homeowners, whose properties are assessed closer to the market value. Overall, in the 29 cities with these assessment limits, new homeowners paid 30 percent more in taxes last year than those who have owned their homes for the average duration within their city. That difference was more than double the 14 percent disparity in the same cities five years earlier.
In addition to providing data on effective tax rates, the study explains why property taxes vary so widely from place to place. The extent to which a city relies on the property tax is chief among the reasons. Cities with high local sales or income taxes do not need to raise as much revenue from the property tax and thus have lower property tax rates on average. For example, Bridgeport, Connecticut, has one of the highest effective tax rates on the median-valued home, while Birmingham, Alabama, has one of the lowest. But the average Birmingham resident pays 39 percent more in total local taxes than the average resident of Bridgeport when accounting for sales, income, and other local taxes.
Property values are the other crucial factor explaining differences in tax rates. Cities with low property values need to impose a higher tax rate to raise the same revenue as cities with high property values. For example, the effective tax rate on the typical home in Detroit, which has the lowest median home value in the study, is three times higher than in San Francisco, which has the highest median home value, after accounting for assessment limits. In Detroit, raising $3,379 per home—the national average tax bill on a median-valued home—would require an effective tax rate 20 times higher than in San Francisco.
Other drivers of variation in property tax rates include the different treatment of various classes of property, such as residential and commercial, and the level of local government spending.
Among the largest cities in each state, the average effective tax rate on a median-valued home was 1.4 percent in 2020, with wide variation across cities. Four cities have effective tax rates that are at least double the national average—Aurora (IL), Bridgeport (CT), Newark (NJ), and Detroit. Conversely, eight cities have tax rates of half of the average or less—Honolulu, Charleston (SC), Boston, Denver, Charleston (WV), Cheyenne (WY), Salt Lake City, and Birmingham (AL).
Commercial property tax rates on office buildings and similar properties also vary significantly across cities. The effective tax rate on a $1 million commercial property is 2 percent, on average, across the largest cities in each state. The highest rates are in Detroit and Chicago, where rates are more than twice the average for this group of cities. Rates are less than half of that average in Cheyenne (WY), Seattle, and Charlotte.
The report is available for download on the Lincoln Institute website:
Over the course of my career, I’ve had the opportunity to teach in many different places and contexts, from a vocational high school on the South Shore of Massachusetts to undergraduate and graduate classrooms in New York, North Carolina, England, Italy, and Russia. Though the students and subjects have differed, one thread has emerged: teaching is the best way to learn.
There’s no better way to discover the gaps in your own knowledge than by trying to convey that knowledge to someone else; no better way to understand how people absorb and act upon information than by actively engaging in that process with them. This isn’t a novel concept: the Latin phrase docendodiscimus, often attributed to Seneca, means “by teaching, we learn”; the Germans promulgated a pedagogical approach called LernendurchLehren, or “learning by teaching.”
What you learn by teaching, first and foremost, is that teaching is more than a “sage on stage” waltzing into a classroom to deliver information from on high. Yes, it requires command of your subject, but it also requires being mindful and present—with an open mind, willing to experiment, and most importantly, listening in order to reframe the discussion when your words aren’t landing well.
Those qualities abounded in our founder, John C. Lincoln. From the earliest days of the Lincoln Foundation, he made education and experimentation a priority. Lincoln was motivated by a fervent belief that the value of land belongs to the community and should be used for the community’s benefit, a concept he first encountered at a lecture by the political economist and author Henry George. He disseminated this idea through his own prolific writing—pamphlets, articles, even a monthly “Lincoln Letter”—and by funding educational institutions.
In 1949, just three years after establishing the Lincoln Foundation, Lincoln penned a letter on behalf of the Henry George School—whose work he funded and whose board he chaired for 17 years—to promote a 10-week discussion course based on George’s work. “The course offers no ready-made panaceas or medicine-man formulas,” Lincoln cautioned. “It attempts, through open discussion and stimulating analysis, to make clear the underlying causes of the problems that face the modern world and to discover the means for solving them.”
That commitment to discussing problems and discovering solutions remains central to our mission. Though we face global challenges John Lincoln could not have foreseen, from climate change to COVID, some of the problems of his era are all too familiar: economic inequality, soaring housing costs, social injustice, and overuse or abuse of natural resources, to name a few.
After John Lincoln’s death in 1959, David Lincoln took the helm of the family foundation. It didn’t take long for David to expand his father’s commitment to education, providing grants to the Claremont Men’s College in California, the University of Virginia, New York University, the University of Chicago, and the Urban Land Institute. A decade later, the Lincoln Foundation established the Land Reform Training Institute in Taipei, now called the International Center for Land Policy Studies and Training and still a partner of the Lincoln Institute. David and his wife, Joan, were also generous supporters of Arizona State University and other institutions.
Even as he supported education in other venues, David dreamed of establishing a freestanding organization that could conduct its own research on land policy—a place that could develop and deliver courses in partnership with like-minded institutions without being in thrall to them. The establishment of the Lincoln Institute of Land Policy in 1974 represented a bold step, a foray into the active pedagogy that powers our work today and that would, in turn, accelerate our own learning.
In the nearly five decades since David Lincoln took that leap, we have taught—and learned from—students around the world, from undergraduates grappling with the basics to seasoned urban practitioners eager to expand their skills. We’ve delivered courses about land value capture and land markets in Latin America; about valuation and the property tax in Eastern Europe and Africa; about municipal finance and conservation in the United States and China; and much more. During the past decade, our courses and trainings have reached nearly 20,000 participants.
Along the way, we’ve learned a few important lessons. We learned, for instance, that when it comes to land policy education, critical gaps exist. As we prepared to launch a municipal fiscal health campaign in 2015, we conducted a straw poll with the American Planning Association to determine the number of graduate planning schools that required students to take public finance courses. The answer? None. To address this puzzling oversight, we developed a curriculum on public finance for planners, which we have since delivered in Beijing, Chicago, Dallas, Taipei, and Boston, in formats ranging from a three-day professional certificate program to a full-semester course for graduate students.
We’ve also learned that professionals working on land policy have a huge appetite for practical training, and we’ve learned how much people value credentialed courses. As the pandemic set in last year, our staff tried out some new virtual approaches that heightened participation and engagement. These ranged from prerecording presentations that could be viewed prior to live sessions to spreading what would have been a tightly packed, in-person schedule across multiple days. In some cases, we reached more people; a virtual seminar on taxation in Eastern Europe, for example, reached 500 people instead of the 40 who would have attended in person. In other cases, we reached a more geographically diverse pool while intentionally keeping enrollment low to foster engagement and active learning. Even as we begin making plans to return to in-person learning, we have become more adept at leveraging the possibilities afforded by virtual instruction and look forward to enhancing those offerings.
This year, building on what we’ve learned and honoring the Lincoln family tradition of taking leaps, we’re launching our first degree-granting program in partnership with Claremont Lincoln University (CLU), a nonprofit, online graduate university dedicated to socially conscious education. Together we’ve created online, affordable Master in Public Administration and Master in Sustainability Leadership programs, and we are working on a third option—the first Master in Land Policy in the United States—which we hope will follow soon.
These degree programs, which can be completed in 13 to 20 months, represent a way of rethinking advanced education from the ground up. They are specifically designed for working professionals who need to gain practical skills they can implement in their daily lives, while they do their jobs. They are both comprehensive and streamlined. Lincoln Institute staff will design and deliver several courses, using real-world case studies and cross-sector analyses to tackle topics ranging from public finance to civic engagement. This fall, I’ll teach a course on Urban Sustainability, helping students acquire the knowledge and skills they need to diagnose urban challenges, design interventions to make cities sustainable, and mobilize resources to implement those solutions—and I have no doubt that I’ll learn a great deal along the way.
The students who enroll at CLU won’t be there simply to get an advanced degree; they’ll be there to explore issues, discover solutions, and become part of a national movement of lifelong learners. With the climate crisis bearing down in alarming new ways, infrastructure crumbling, and affordable housing an increasingly endangered species, public officials are facing seemingly insurmountable challenges with fewer resources at their disposal. This program will build a growing network of informed, hands-on problem solvers who can use land policy to address our thorniest environmental, economic, and social challenges.
At the Lincoln Institute, we are intent on “finding answers in land.” We don’t claim to have all the answers. We are committed to finding them through our research and through collaborations with partners around the world. Through initiatives like our new CLU partnership, we will continue to teach, to learn, and to experiment—and we will seek to shed, as John Lincoln wrote in 1949, “some new, searching light on the vital questions that concern us all.”
Learn more about the Claremont Lincoln University–Lincoln Institute of Land Policy partnership and current fellowship opportunities by visiting www.claremontlincoln.edu/lincolninstitute75.
George W. McCarthy is president and CEO of the Lincoln Institute of Land Policy.
Image:Claremont Lincoln University headquarters in Claremont, California. Credit: CLU.
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