should this obstacle prove insuperable, Netzer sets forth some brief guidelines for rational departures from uniformity in a "second-best" world.
Property taxation has changed substantially, and no doubt will continue to do so. One change is its diminished relative financing role over time, the result of increasing revenue diversification at the state-local level. This was prompted largely by complaints about various features of property taxation, some inherent and some in the particulars of its administration. Such complaints are not of recent origin, as Fisher reminds us in Chapter 5, but they became harder to ignore as the property tax grew in relation to GNP, personal income, and property value in the 1960s and 1970s.
Increasingly, states moved to restrict the property tax role in various ways, but with major differences in the particulars across states. Approaches included indirect property tax relief through new local authority to levy non-property taxes and increased state aid funded by non-property taxes, as well as changes in property taxation to provide more direct relief, including various rate and levy limits. While these approaches generally applied equally to all types of taxable property within a taxing unit, direct property tax relief approaches targeted the relief more narrowly to create de jure differences in effective property tax rates. Exemptions for inventories and other types of personal property, as well as programs targeted on real property--such as homestead exemptions, agricultural use-value assessment, circuit breakers, and classification--are among the programs in this category. As noted, every state now has one, and often more, of these programs in place to differentiate even within the real property component of the tax base.
Whatever the reasons for the changes--to reduce tax burdens deemed excessive, to set more realistic goals for tax administration, to promote economic development, among others--a consequence has been a narrower tax base and a less uniform legal standard for property taxation. The changes have created so many and such major differences in effective tax rates in some states that they mark a wide departure from the usual concept of a uniform tax, which still is the basic underpinning of the American property tax system. The U.S. Supreme Court seventy years ago upheld the primacy of the uniformity requirement under the federal equal protection clause: "Where it is impossible to secure both the standard of the true value, and the uniformity and equality required by the law, the latter is to be preferred as the just and ultimate purpose of the law" ( Sioux City Bridge Co. v. Dakota County 1923: 445).
It reiterated this view in 1989, and stated: "The fairness of one's allocable share of the total property tax burden can only be meaningfully evaluated by comparison with the share of others similarly situated relative to their property holdings" ( Allegheny Pittsburgh Coal Co. v. Webster County 1989: 639; emphasis added).