State lawmakers seeking to enact residential property tax relief have two broad options: across-the-board tax cuts for taxpayers at all income levels, and targeted tax breaks. More than 40 states have chosen to achieve across-the-board tax relief by providing a “homestead exemption.” This policy brief explains the workings of the homestead exemption and evaluates its strengths and weaknesses as a property tax relief strategy.
Local Policy
Economically and racially equitable tax systems are essential to adequately funding education, health, childcare, affordable housing, and other shared priorities. This is especially true at the local level, where the connection between revenue and the quality of public services is extremely clear.
Our local work explores how to rebalance local taxes, including but not limited to:
• Shifting away from fines and fees as revenue-raisers,
• Considering local tax credits to bolster economic security and promote healthy communities,
• Removing state legal barriers to equitable local taxes,
• Reforming property tax assessments that widen racial and economic disparities,
• Ensuring that localities can raise revenue to tackle urgent challenges in public health, early childhood education, and more.
ITEP's Local Policy Research Priorities
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brief September 1, 2011 Property Tax Homestead Exemptions
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brief September 1, 2011 Capping Property Taxes: A Primer
In response to what anti-tax advocates have branded as “out of control” property taxes, a number of states have decided to make use of tax “caps” to restrict the growth of local property taxes. California’s Proposition 13 tax cap, approved in 1978, inspired numerous other states to enact similarly ill-conceived property tax caps. These caps can come in many forms, but all are poorly-targeted and costly. In most cases, these caps amount to a state-mandated restriction on the ability of local governments to raise revenue. While state lawmakers get to take credit for cutting taxes, local lawmakers are the ones forced to make difficult decisions regarding which services to cut. There are three main types of property tax caps in use around the country: caps on property tax rates, caps on assessed value growth, and caps on overall property tax revenue growth.
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brief August 1, 2011 How Property Taxes Work
The property tax is the oldest major revenue source for state and local governments. At the beginning of the twentieth century, property taxes represented more than eighty percent of state and local tax revenue. While this share has diminished over time as states have introduced sales and income taxes, the property tax remains an important mechanism for funding education and other local services. This policy brief discusses why property is taxed and how property taxes are calculated.
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report March 3, 2011 The ITEP Guide to Fair State and Local Taxes
The ITEP Guide to Fair State and Local Taxes, released in March of 2011, offers citizens, activists, journalists, and policymakers a detailed primer on state and local tax policy. The…