The Downsides of Property Tax Caps

July 26, 2018. The Center on Budget and Policy Priorities (CBPP) released a report last week about how property tax caps are hampering the abilities of municipalities to fund basic services and are exacerbating inequality. The study focused on the impact of caps in Michigan, Massachusetts, Oregon and New York. In New York, more than three-quarters of cities and half of the counties reported significant fiscal stress due to the the adoption of its tax cap in 2011 and subsequent cuts in state aid. During a press regarding the report, the Fiscal Policy Institute commented on the negative impact of the property tax cap on New York.

Because of property tax caps, “states are pushing too many costs down to the lower level,” said Ron Deutsch, executive director of the Fiscal Policy Institute, during a press call about the report.

Property tax caps, according to the analysis, also contribute to inequality. For one, the caps strangle funding for public education, which the researchers see as a pathway for minority and low-income children to move up the socioeconomic ladder.

“I think in particular with schools we have a great imbalance between our high-needs school districts and our well-off school districts in terms of per pupil spending. The tax cap is institutionalizing these inequities,” Deutsch said.

“We never thought the tax cap was the right solution,” said Deutsch. “Property tax caps should be eliminated. If they aren’t eliminated, at the very least, they should be amended.”

Here is the link to Governing.

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