The Looming Property Tax Crisis
Of all taxes property taxes are probably the cruelest as they give not a whit about a person's means to pay. Most taxes as we all know are income based and usually confiscate a percentage of one's income, so the more one makes the more on pays, the less one makes the less one pays. Having little or no income and not paying a lot of taxes is not going to bring the wrath of government onto a person.
Property taxes do not work that way. Property taxes are based on the value of one's homestead and do not vary depending on one's ability to pay the tax. The jobless widow is expected to pay the same property tax as her & her husband did when he was alive and working. Furthermore, the penalty for not being able to come up with a property tax payment is forfeiture of the property to the government.
Now, the baby boomer generation is reaching retirement and their incomes are starting to become pension/SS/savings based. Many will find themselves hard pressed to maintain their property tax payments the sharp and flexible ones will see that and sell their houses and move into a property more in lines with their ability to pay property taxes the not so smart or the bullheads will lose their properties to government foreclosure.
This is but one force that is going to drive property values down. What else will then go down? Property tax receipts. So, what will then happen to city governments? They will be forced to make choices. One choice is the instinctive and natural reaction city hall has and that is to raise the levy per $1,000.00 of property value.
Fortunately, demographics should take some of the pressure off of government to keep increasing spending but this can only be the case if government limits its scope. This is important and this is where the real weakness is. This is what TABOR is designed to limit. TABOR is not to reduce government spending it is to check the real growth of government.
So unless something changes we will have a homelessness crisis. The government will wind kicking a lot out of their homes.