Each year, the average American household spends $2,869 on real estate property taxes plus another $448 for residents of the 26 states with vehicle property taxes.
In order to determine who pays the most relative to their state, the personal-finance website WalletHub today released its Property Taxes by State in 2024 report, as well as expert commentary. The report compares home and vehicle taxes across the nation.
Property Taxes in New York (1st=Lowest; 25th=Avg.):
- Real-Estate Property Tax Rank: 46th
- Vehicle Property Tax Rank: 1st
- Real-Estate Tax on Median State Home Value: $6,303
- Real-Estate Tax on Median U.S. Home Value: $4,626
- Vehicle Property Tax on Best-Selling Car: $0
For the full report, please visit:
https://wallethub.com/edu/states-with-the-highest-and-lowest-property-taxes/11585
Q&A:
Should local tax policy be adjusted to rely more or less on property taxes versus other forms of taxation?
“Property taxation has been favored historically because of its comparative ease to assess and collect and its relative stability over time. While other forms of taxation can sometimes be evaded (e.g., by purchasing goods elsewhere), real property cannot be moved. Incomes and sales can vary with the economic conditions, but property tax bills are still paid. So, it is a safe, secure, and predictable revenue source that governments value. However, real property does not always generate income in proportion to its value. When government fiscal policies create inflationary pressures, property values tend to increase over time. This can have significant impacts on some demographic groups, particularly those who are retired or those who live in areas that are subject to gentrification. As property taxes increase, these people can be effectively priced out of their ability to stay in their homes. Efforts to provide exemptions or other forms of relief are not always effective in reducing those pressures. Other forms of taxation, including sales taxes, have the advantage of targeting consumption, which will tend to vary with income. Those in lower income brackets consume less, but that consumption may be proportionally greater than that of those in higher incomes, resulting in some regressive effects. Income taxes, particularly those with progressive tendencies, can have negative impacts on productivity. Moreover, income earners are often mobile. They will choose to move to another location if those taxes increase.”
Edward A. Morse – Professor and Chair in Business Law, Creighton University School of Law; Senior Affiliated Scholar, Heider College of Business
“This issue has several dimensions. First, as property taxes pay for public education, poorer neighborhoods suffer. Second, legislative initiatives in some parts of the country (most famously, Proposition 13 in California) have limited the property taxes available to cities by restricting the ability to assess increased property values. However, property taxes are generally progressive — that is, the more valuable the property, the higher the taxes. Alternatives to property taxes like sales taxes tend to be regressive — falling more heavily on poorer populations. Income taxes, on the other hand, can be structured to be progressive.”
Roberta Mann – Professor Emerita, University of Oregon School of Law
Should certain groups of people be exempt from property taxes or be taxed at a lower rate?
“Many states do provide exemptions or preferential rates to certain groups. However, my personal opinion is that this special treatment is not a good tax policy. Public Choice Theory suggests that advocacy groups may be able to convince lawmakers to grant special treatment even if it is not in the best interest of society overall. Using the tax system to provide benefits is subject to less scrutiny than direct expenditures, making it a preferred tool for these types of provisions. In my opinion, it is better to keep it simple and use other methods to provide assistance or relief if it is in the overall interest to do so.”
Jeffrey H. Kahn – Professor and Associate Dean for Business Law Programs, Florida State University
“It is common to provide at least a partial exemption to senior citizens, veterans, first responders, and homeowners (homestead exemption). Property tax exemptions reflect a community’s values, and those values may differ from other, even neighboring communities. Allowing individual communities to decide these issues arguably offers the most representation to the property owners that they are taxing.”
Valrie Chambers, Ph.D., CPA – Beights Research Fellow; Associate Professor, Stetson University
Should more types of property be subject to property taxes? If yes, what types?
“Personal property taxation regimes have been tried, but they are problematic for many reasons, including mobility and the reliability of assessment. Costs to verify can be high. We should not favor systems that have high transaction costs, low reliability, or ease of evasion.”
Edward A. Morse – Professor and Chair in Business Law, Creighton University School of Law; Senior Affiliated Scholar, Heider College of Business
“Property other than real estate can be subject to property taxes, but that tends to be highly unpopular. Virginia has an annual personal property tax based on the value of motor vehicles. A federal luxury tax applied to yachts and airplanes (as well as some other luxury goods) from 1991 to 1993. The tax was repealed after the boat-building industry lost thousands of jobs. Although the tax was designed to raise revenue from wealthy persons purchasing luxury goods, it turned out the luxury tax discouraged purchases of those items, which hurt working-class people who built them.”
Roberta Mann – Professor Emerita, University of Oregon School of Law
