Beyond the Property Tax: Local Government Revenue Diversification

By Bartle, John R.; Ebdon, Carol et al. | Journal of Public Budgeting, Accounting & Financial Management, Winter 2003 | Go to article overview

Beyond the Property Tax: Local Government Revenue Diversification


Bartle, John R., Ebdon, Carol, Krane, Dale, Journal of Public Budgeting, Accounting & Financial Management


ABSTRACT. Local governments in the U.S. rely less on the property tax than they have historically. This long-term trend has been accompanied by important shifts in the composition of local revenues. While the property tax still serves as one primary source of local government revenue, increasingly other sources are used to pay for local government. This paper first examines that trend, the forces behind it, and its regional impact. We then explore trends in three central states - Iowa, Nebraska, and Arkansas - that have experienced substantial revenue shifts in recent years. A concluding section discusses the options for the future.

THE PLACE OF THE PROPERTY TAX

The property tax is one of the oldest, most widely used, and most local of revenue sources in the United States. In the 19th century, it was a fairly comprehensive tax on wealth, as most wealth was either real property or tangible personal property. As the economy moved away from its agrarian basis, the tax also changed. It has become mainly a tax on real property and limited types of personal property, such as business machinery, equipment, inventories, and in some states, automobiles and boats. As a wealth tax it is flawed, as it is imposed only on certain types of wealth, and does so on the basis of the gross, rather than the net value. Further, the property tax is expensive for governments to administer, as it requires property valuation by assessors. Political pressures work against accurate and up-to-date assessment, and for some governments, assessment quality remains low (Mikesell, 1993, 1999). The property tax "is a 'lump sum' tax that is highly visible and often inconvenient to pay. It falls heavily on unrealized capital values, burdens shelter, and may be unrelated to the ability of the owner's current income." (G. Fisher, 1996, p. 209). Despite these problems, the real estate component of the property tax has the desirable features of taxing an immobile factor of production, and taxing landowners (including those who may not be residents) who benefit from certain locally provided services such as public safety, roads, and sewers and sanitation. Sokolow (1998, p. 186) in a recent review of property tax trends stated, "It's easy to pick on the property tax.... Yet as a local government revenue source, it has meritorious and unparalleled features, high revenue yield, and stability in particular." Other taxes are more difficult to levy and administer at the local level, and some jurisdictions have limited sales and income tax bases (G. Fisher, 1996). Because of these features, the general property tax has long been considered as the "best available independent source of local revenue, and made it possible for citizens to spend their own money as they collectively saw fit" (Mields, 1993, p. 16).

Many premature obituaries of the property tax have been written, often emphasizing the alleged inelasticity of the property tax. This is a fair criticism, as a review of several studies indicates that income and sales taxes are significantly more elastic relative to their tax base than is the property tax (Mikesell, 1999, p. 298). Other obituaries have stressed the limits imposed on property tax rates as a result of the general public's revolt against the tax. However, through the 1980s and into the 1990s, property tax levies typically increased, while the tax rate grew less slowly or even declined. A resurgent economy plus better assessment techniques have boosted assessed valuation in many localities, and have produced a revenue bonanza in many cities (Dearborn, 1993). Criticisms about its regressivity have been muted as more states have enacted various exemptions to the property tax (Bartle, 2000). Similarly, the popular outcry against the property tax has had to be balanced against the public's opinion that it is a relatively fair and beneficial tax (Speer, 1997). At the beginning of the twenty-first century, property taxes continue to be a significant source of funds for municipalities, counties, school districts, towns, villages, and special districts. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Beyond the Property Tax: Local Government Revenue Diversification
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.