Another Way to Blunt Tax Increases

Edward J. Dodson

[A letter, reprinted from the Sun-Sentinal of Fort Lauderdale,
Florida. Sunday, 7 May, 2006]

The mayor of Broward County, Ben Graber, has proposed adoption of "a progressive ad valorem or real estate tax based on income" as a way to address the rising financial pressure on homeowners living on modest and/or fixed incomes.

The ideal solution is for the Legislature to authorize communities to move to a land-only tax base, exempting the value of improvements altogether. There is an extensive economic literature in support of this move, which can be implemented over a number of years with good economic effects and a dramatic simplification of the assessment and administration of the property tax.

Whether the above restructuring is adopted or not, homeowners could be permitted to apply to have their annual property tax payment capped based on a formula tied to income and liquid assets. Then, the unpaid amount would accrue as a lien against the property to be paid at time of sale or transfer of ownership. In this way, the property (not the owner) carries the obligation to the community to pay for the delivery of public goods and services.