Property Taxes Testing Limits
April 13, 2004
Property taxes are the biggest source of state and local government revenue, amounting to about $297 billion nationally in 2003. In response to rising tax rates and home values, homeowners in many states are revolting, according to USA Today.
Portland, Maine, for example, saw a 200 percent increase in the value of its waterfront homes over 12 years, prompting 51,000 residents of the state to sign an anti-tax measure that will likely be put on the November ballot.
Now, over half of the states are considering cutting property taxes or limiting annual increases:
- More than 40 states have limits on property tax increases -- California tax hikes cannot exceed 2 percent per year, while Kentucky caps increases at 4 percent annually.
- Voters in Maine and Washington will consider measures that would reduce property taxes from 20 to 50 percent.
- While some states are considering reducing property taxes, they want to increase other taxes to make up for lost revenue -- for example, New Jersey's governor is looking at raising the state income tax, while Pennsylvania is considering legalizing slot machines.
In some areas, home values have increased dramatically, resulting in huge tax increases in certain neighborhoods.
Source: Dennis Cauchon, "States Consider Property-Tax Limits," and "Rising Property Taxes Scare Off Homeowners," USA Today, April 12, 2004.
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