tax primer--part 2--property taxes

     Property taxes are local. They are collected locally, and spent locally.  Property taxes are the main source of funding for school districts, which are locally run and administered. They were used to build the school buildings, and are used to maintain school buildings and grounds, and to pay school staff.  This is why some school districts have more money than others, and why people argue about property taxes so much. Property taxes also pay for local police, fire, ambulance, library, trash, and streets department services.
     Property taxes are also why property is assessed by the local or county government. The assessor checks on the current value of the property, to make sure that taxes are being paid on what the house or building would sell for at the time it is assessed. Property values change over time, so this is important. A lot of people worry about being re-assessed because their taxes might increase. If they are already retired and living on a "fixed income"--Social Security, a pension or retirement plan--it's possible that they won't be able to afford to pay higher taxes, and will have to sell their home.
     One of the reasons people spend so much time arguing over property taxes is that they can be "regressive".  That means that poorer people are, in a way, paying higher taxes. Where property values are low, the property is taxed at a higher rate to collect enough money for local needs. Where property values are high, the rate of taxation may be lower--as more is collected based on the value of the property. For example, a one percent (1%, or one penny on each dollar) tax on a million dollar ($1,000,000) property would yield ten thousand dollars ($10,000) in taxes. One percent of a hundred thousand dollar ($100,000) property would yield only a thousand dollars ($1,000)--so the municipality with more hundred thousand dollar properties may need to tax them at a higher rate--say three percent (3%, or three pennies on each dollar), to collect even enough taxes to keep the schools open and the trash picked up. While the tax bills of the people who own the hundred thousand dollar properties are still much lower than the tax bills on the million dollar properties, the people who pay them make less money, and the taxes are a greater portion, or percent, of their income (the money they get from working or a pension). This is called a "regressive" tax. None of our taxes are set up to work this way, because people agree that it isn't fair. But in practice, some taxes do work out to be "regressive".