Property taxes are a burden for homeowners in these tough economic times. But, they are also an important revenue source for governments, making up 34.6 percent of total local revenues, and nearly 64 percent of local own-source revenue. A recent study released by the Urban- Brookings Tax Policy Center examined property tax rates across the country and their impact on homeowners.
Authors Benjamin H. Harris, policy director of the Hamilton Project and Brian David Moore, research assistant at the Tax Policy Center, show that taxes constitute one quarter of homeownership costs over the median length of ownership.
The good news for homeowners is that many counties and states have attempted to reduce taxpayers’ burden through homestead exemptions and other laws.
The study also discovered that taxes vary substantially across the nation. In most communities, they cost about $1,000 per homeowner and are below 1 percent of the home’s value. Sixty percent of counties nationwide had an average tax burden between $500 and $1,500 per homeowner.
However, the burden is substantially higher in certain counties in California, Illinois and the Northeast, where homeowners pay closer to $3,000 each. New York and New Jersey have the most counties with the highest property tax burdens. Westchester, Nassau, and Bergen counties in New York had the three highest average tax burdens, all more than $8,500.
The Mountain West region and Southeast regions have lower tax burdens: Alabama and Louisiana lead the nation on the lowest property taxes. In these states, 24 counties have average taxes below $250.
Taxes will continue to be a critical revenue source for local governments in the future, and thus, property taxes will continue to affect the cost of residential investment, the housing sector and the personal finances of homeowners, the study finds. — Madhusmita Bora © CTW Features