Start Date
30-11-1988 2:30 PM
End Date
30-11-1988 4:30 PM
Description
Governments and revenue systems develop within particular historical contexts. It could be argued that America was founded on the basis of tax protest. The property tax system that developed in the new country was legislatively centralized and administratively decentralized. State legislatures defined the tax base, specified value definitions, and established the administrative machinery, but the actual tax administrators were almost all locally elected officials. Although it is not popular, the property tax generates significant income for local governments, even though it is declining as a percentage of both local taxes and general revenues. Local property taxes generated more than 70% of general revenues in 1902 but by 1982 this figure had dropped to less than 30%. At the state level, the percentage drop was even more dramatic. State property taxes fell from more than 40% of general revenues in 1902 to about 1 % in 1982. In the face of these percentage declines, property tax collection in the United States continued to grow in absolute amounts and should exceed US$125 billion in 1988. It is important to recognize that the property tax remains the principal source of local tax revenue. The reason for this is related to the structure of local government. There are nearly 85,000 small, overlapping local governments in the United States. The history of the property tax in the United States supports four hypotheses: 1. There is a symbiotic relationship between taxation and structure of local government in the United States. 2. The administrative structure of the property tax departs substantially from a model system of tax administration. 3. Historically, legislative centralization and administrative decentralization made it difficult to administer the general property tax, especially when attempts were made to tax complex, intangible property interests for specialized mobile personal property. 4. Even though the property tax is unpopular and often poorly administered, it has survived because it makes it possible for the American system of local governments to survive. Although these hypotheses appear consistent with historical developments, they are hard to prove. Comparative research would make a contribution. A study of the administrative techniques applied in the various countries might suggest ways in which the property tax base could be broadened into something more closely resembling the general property tax.
Publication Date
November 1988
Recommended Citation
Fisher, Glenn W., "Four challenging hypotheses on the property tax" (1988). International Research Symposium. 26.
https://researchexchange.iaao.org/irs/irs88/sessions/26
Four challenging hypotheses on the property tax
Governments and revenue systems develop within particular historical contexts. It could be argued that America was founded on the basis of tax protest. The property tax system that developed in the new country was legislatively centralized and administratively decentralized. State legislatures defined the tax base, specified value definitions, and established the administrative machinery, but the actual tax administrators were almost all locally elected officials. Although it is not popular, the property tax generates significant income for local governments, even though it is declining as a percentage of both local taxes and general revenues. Local property taxes generated more than 70% of general revenues in 1902 but by 1982 this figure had dropped to less than 30%. At the state level, the percentage drop was even more dramatic. State property taxes fell from more than 40% of general revenues in 1902 to about 1 % in 1982. In the face of these percentage declines, property tax collection in the United States continued to grow in absolute amounts and should exceed US$125 billion in 1988. It is important to recognize that the property tax remains the principal source of local tax revenue. The reason for this is related to the structure of local government. There are nearly 85,000 small, overlapping local governments in the United States. The history of the property tax in the United States supports four hypotheses: 1. There is a symbiotic relationship between taxation and structure of local government in the United States. 2. The administrative structure of the property tax departs substantially from a model system of tax administration. 3. Historically, legislative centralization and administrative decentralization made it difficult to administer the general property tax, especially when attempts were made to tax complex, intangible property interests for specialized mobile personal property. 4. Even though the property tax is unpopular and often poorly administered, it has survived because it makes it possible for the American system of local governments to survive. Although these hypotheses appear consistent with historical developments, they are hard to prove. Comparative research would make a contribution. A study of the administrative techniques applied in the various countries might suggest ways in which the property tax base could be broadened into something more closely resembling the general property tax.