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February 2013 Policy Study, Number 13-2

   

Creating a Fair Property Tax System: Is it Possible?

   

Problem

   

 

We have constantly been bombarded with statements like “my property taxes are too high” to “we have to reform property taxes now.” So this year the Iowa Legislature will again be trying to tackle the problem of reforming the property tax system, so that it is more “equitable.” I do apply that term loosely, for there is nothing equitable about our property tax system. It keeps getting band-aids placed on it, and now it is one of the most complicated tax structures we have in the state. You definitely need a degree in accounting to make sense of the complex systems that our state uses to figure our annual property taxes.

 

Currently in the state of Iowa we have over 2,000 “taxing authorities” when it comes to property taxes. This definitely adds to the complex mess of that property tax system.[1] Another problem with our system is the “rollbacks.” This system, which was supposed to help the property tax system, has just shifted the burden and caused more problems with the current system.

 

So as you can already see cutting property taxes is easier said than done. There are so many entities involved in the property tax system that one move can affect ten different entities at once. So for the state to come up with a method to cut taxes and not negatively impact everyone receiving property tax revenue is not a small task.

 

In FY 2013 this system is bringing in $4.7 billion for schools, cities, counties, community colleges, and other entities that use the property tax system to collect revenue.[2] Property taxes provide the funding for many different governmental entities and therefore are a sacred cow when it comes to reform or efforts to reduce the burden that property owners face. This study will show that in order for our state to grow and prosper we must reform our property tax system for all forms of property.

 

   

 

Click here for pdf copy of this Policy Study

 

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