Have a Future?
In 1956 one of the most perceptive analysts of state-local finance, George W. Mitchell, forecast to the annual conference of the National Tax Association that, in twenty years, "the property tax ... will have become an all-but-forgotten relic of an earlier fiscal age." 1 Mitchell had been heavily involved with the property tax as a scholar and as a state tax official during the 1930s and 1940s, and his comment had a solid basis in what was then recent history. The property tax, which had provided some 80 percent of all state-local tax revenue until the early 1920s, was providing only 45 percent of that total in the mid-1950s. At that rate of relative decline (1.25 percentage points a year), the property tax would be expected to account for only 15 percent of state-local tax revenue in 1980, perhaps not an all-but-forgotten relic but surely no longer the mainstay of local-government finance in the United States.
A decade later, in 1966, the present writer—observing from the vantage point of a decade of stability in the relative role of the property tax, at the 45-46 percent level—reflected on a "new complacency" about the role of the tax. 2 But even as that study was being published, the decline in the role of the property tax had resumed. Just before Proposition 13 was passed in June 1978, the property-tax share had declined to 34 percent; in the twelve months ending June 30, 1981, it was 30 percent. Looking ahead to the turn of the century one might ask: Was Mitchell right, but one generation premature? Or is the role of the tax likely to stabilize over the next generation, playing a crucial, if no longer dominant, part in state-local finance, especially local-government finance?
The level of the property tax in the future as well as its form (in terms of____________________