Many of us are inconsistent in our economic desires. So the price of my house has to increase, because the price is increasing, but other houses also want to decrease, so that I can sell my house and buy a good house. Also, I want my home to increase in value, but also pay lower property taxes. David Schleicher digs into the second problem in “The Great American Property Tax Freak Out” (posted online at SSRN on September 1, 2026). He wrote:
In the past three years, several states have significantly reformed their property tax system, providing large tax benefits for owner-occupied housing and shifting the burden of paying for services like schools and police to commercial property owners (including rental apartment buildings), to other local taxes, and state funding, which generally comes from sources like sales taxes and income taxes. Some, including Florida, Ohio, North Dakota, and Texas, have considered going further, either completely waiving property taxes for owner-occupied homes or waiving property taxes altogether. … One might think that homeowners would be happy if their biggest asset has appreciated in value, as their homes have, especially in the suburbs, in the post-COVID era. But because the property tax is a tax on wealth, property owners have responded to their increased wealth with political anger, prompting changes in property tax policy, often leading to rate increases on commercial property owners who have been reduced at the same time. …
[T]this reform changed the property tax from a tool used by homeowners to provide locally desired services to a more standard form of redistributive tax, charging commercial property owners to pay for services to homeowners. Furthermore, it will lead to more state authorities than local governments, less stable funding for local governments (but also less tax foreclosures in recessions), and strict zoning control (but more housing construction where it is legal). Perhaps most importantly, this property tax reform will result in higher housing costs, and thus a substantial transfer of wealth to those who already own a home and have seen their net worth increase significantly in the post-COVID housing market.
A few other facts and insights seem worth adding here.
1) there are many local variations in public finance in the United States. But as a broad statement, property taxes are a major source of revenue for local US governments, and a major source of funding for local schools. Many local governments have traditionally relied on property taxes to pay for police as well. The political dynamics of reducing property taxes often include state-level actions that limit or block property taxes at the local level. It’s not clear whether voters for lower property taxes have made the connection in their minds about possible cuts to local public services.
2) property tax is a form of wealth tax, and has the standard problem of wealth tax: specifically, you can have more wealth – say, the value of your home, business, or retirement account increases – without having the direct income to pay higher taxes. Thus, older voters who tend to have more accumulated wealth, partly in the form of home equity, but also below current income, are a powerful group politically and sympathetic to the push to reduce or eliminate property taxes.
3) If property taxes are reduced or eliminated, the cost of owning a home goes down. (For example, imagine if you could guarantee that your home’s roof, exterior, driveway, plumbing and HVAC system would never need to be repaired or replaced, which would also result in lower home ownership costs.) With lower home ownership costs, home market prices increase. Thus, the ironic result is that higher home prices lead voters to want to limit or repeal property taxes, which in turn leads to higher home prices. In addition, current homeowners who have already benefited from higher home values will benefit more, while home ownership will appear more expensive to future home buyers.