RALEIGH – Last year, a number of North Carolina counties raised their property taxes. This year, several North Carolina cities and towns appear poised to raise their property taxes. It is no accident that voters elected city officials last year and will elect county officials this year.
The relationship between local taxes and election cycles bothers both sides of the debate over government’s size and scope. Those who believe passionately that North Carolina needs more local “investment” in education, roads, and other programs – that our communities can only be “world class” if they can boast a lot more government – want politicians to be explicit about this to voters. They want the voters to endorse this vision for what local government can accomplish. It irks them no end that their own political allies, seeking to win or retain office, don’t feel confident enough in the case for higher taxes and bigger government to take it to the voters in an election year.
On the other hand, those who believe passionately that North Carolina governments need to learn to live within their means, that existing revenue flows to education and other priorities are sufficient and simply need to be spent more effectively, are dismayed that their efforts seem to work only when politicians feel the hot breath of agitated voters on their backs. Fiscal conservatives would like politicians to behave responsibly (in their minds) even when an election is not on the immediate horizon. And they would like voters to have long enough memories to push politicians today for raising taxes a year or more beforehand.
We all want what we can’t get sometimes. I want Hollywood to go ahead and make a great Lord of the Rings-type blockbuster out of my favorite fictional character, Edgar Rice Burroughs’ John Carter, Warlord of Mars. It seems I am to be perpetually disappointed.
Back to Earth – or at least to Charlotte, Greensboro, and Raleigh, where many public officials ought to get down to earth. For those wishing to get grappling hooks on these flighty politicians and drag them to reality, here’s some advice: don’t mistake tax substitutions for tax reductions.
This may not be conventional wisdom in conservative circles, but I happen to think that pursuing alternatives to the property tax is a bad idea. The very reason why property taxes tend to be unpopular – that they are paid once a year, in ways that tend to sting us – is why we need to retain them. Politicians that say they will hold down property taxes as long as the legislature gives them new revenue options, such as local sales taxes or impact fees, are not really being honest. They will take the new options, use them, and then raise property taxes anyway if they can get away with that, too. You may get lower property taxes than you otherwise would have, but you won’t end up with a lower overall tax burden.
Indeed, I think we should remove impediments to property taxes generating growing revenues at stable rates, so as to weaken the case for giving localities new taxing authority. Growth should, indeed, pay for itself. Allowing property tax revenues to grow with population and prices is an obvious way to do that.
For example, it is not a tax increase when the property-tax rate stays the same after a revaluation. Yes, your tax bill goes up, but that’s because your property value goes up. No one believes that when your check to the IRS goes up because you got a pay raise, the federal government has just raised your taxes. The language needs to change here so that we don’t have artificial pressure to go down on property tax and up on sales or other taxes.
Furthermore, I’d expand the base of the property tax to include nonprofit and some governmental property, since those who work for or do business with these entities impose the same service costs (roads, public safety, etc.) as those who work for or do business with entities located on taxable property.
One final idea, borrowed from the ancient Roman Republic: perhaps we should elect our local officials every year, rather than every two to four years. I am tempted to add that perhaps we should make property taxes due on Election Day, just to keep things neat and tidy, but I don’t want to be pushy.
Hood is president of the John Locke Foundation.