Property Taxes: Not All Bad
I always liked that old saw, â€œthe devilâ€™s in the details,â€ because it is so often so true, and if there were a poster boy for the concept, it would be property taxes. Property taxes have the potential of providing fair, equitable, and stable funding for many of the social services that contribute to a better quality of life for working families. At the same time, the basic principles of property taxation can be deliberately twisted and obfuscated in a welter of technical gibberish, hiding the actual use of property taxation to heavily tax low and moderate income families, while letting corporate and wealthy property owners pay less than their share. Moreover, the actual fact of inequitable and unfair property taxes, or the manufactured perception of unfairness, can be used as a club to move public opinion and policy makers to propose â€œsolutions,â€ such as sales taxes, that have the potential to be even more inequitable and unfair to working families.
This is a lot to bite off at one time, so I suggest that we take a look at various aspects of property taxes over time, in a periodic series of blog entries. This first one will begin a review of a few resources and current issues on the way toward a better understanding of the real potential of property taxes. Much of the discussion will focus on the Municipality of Anchorage, however the principles are fairly universal and can be of use in almost any public arena where property taxes are a current or proposed revenue producer. The following is the introductory paragraph from the home page of the Anchorage Real Property Tax Information Web Site:
The Municipality of Anchorage provides a variety of services to its citizens. These services are funded in part by Real Estate, Personal Property and Business Property taxes. There are over 90,000 Real Property parcels within the Municipality of Anchorage that covers over 1,900 square miles of land. The tax section staff of four is responsible for billing and collecting these property taxes. In the prior tax year 2004 the tax section mailed out over 109,000 tax bills and collected approximately $335,593,280 on behalf of General Government and the Anchorage School District.
Clearly, there is a lot of property and revenue involved in this massive effort to generate revenue for the Municipality. Every resident of the Anchorage bowl, whether they own property or not, is affected directly or indirectly by the levying of property taxes. By the way, there is quite a bit of practical and useful information on this site for property owners, so I recommend a visit. Meanwhile, a recent press release noted that:
Reps. Berta Gardner and Les Gara and Sen. Johnny Ellis, all D-Anchorage, announced today [November 7, 2005] that they will file a bill to share $69 million of state surplus funds with communities throughout Alaska.
“When Governor Murkowski ended 25 years of state revenue sharing, he put pressure on communities to raise taxes,” Representative Gara said. “The state can afford to help communities provide for local property tax relief and essential local services.”
High oil prices are predicted to give the state a surplus of around $1 billion next year. According to the Department of Revenue, each addition $1 a barrel brings in $69 million.
“We think the state can afford to share $1 of this windfall with local communities,” Representative Gardner said.
The Municipality of Anchorage estimates that this proposal would reduce property taxes by about seven percent. The important question not addressed in this press release is, reduce property taxes for whom? Would the reduction reduce property taxes in such a way that corporations would benefit more than working families? Would those most in need of tax relief, such as low income seniors, be targeted for more favorable treatment? These are important questions, questions of â€œdetail,â€ but they are not really addressed in the press release.
Some members of the Anchorage Assembly are eager to institute a sales tax that would presumably provide property tax relief. A recent article in the Anchorage Daily News noted thatâ€¦
Anchorage Assembly members pushing a city sales tax took heart from a public opinion poll that indicated 56 percent of voters support at least one version: a 3 percent tax on goods, with exemptions for food, medicine and rent.
The Assembly commissioned the poll to gauge public support as it considers putting a tax question on the April city ballot. Assemblyman Dan Coffey has proposed putting a 3 percent sales tax on the April city election ballot. He says it would be used to offset 25 percent of property taxes.
However in the same article,
University of Alaska economics professor P.J. Hill said sales taxes typically take a higher proportion of poor people’s incomes, compared to those who are well off…
Hill said he can’t understand why anyone would want to replace a proportional tax like a property tax with one that hits lower income people harder.
“It’s not as if property is taxed heavily here,” he said.
More on this subject to follow in subsequent blog postings…