Usually the Best Available Tax, but It’s a Complex Question

Andrew Reschovsky, University of Wisconsin-Madison

The property tax is a highly unpopular tax. Not only do survey respondents consider it unfair, states across the country have long imposed limitations of various kinds on property tax revenues. Not surprisingly, local government reliance on property taxes in the United States has declined during the past few decades. In 1977, the year before California enacted Proposition 13, property taxes accounted for 81 percent of local government tax revenue and 59 percent of the own-source general revenues of local governments. In 2010, these percentages stood at 75 and 48 percent, respectively. Nevertheless, the property tax remains the mainstay of local government finance in the United States, with local government collecting $462 billion in property tax revenues in the 12 months ending July 2012 (U.S. Census Bureau, 2012).