Memo to Tax Foundation: Property Tax IS Regressive
The Tax Foundation does numbers really well. But when it comes to what those numbers mean, their reliability vanishes.
Case in point: Today I pulled some numbers from its recent postings on property taxes. The numbers were helpful. But then I saw a strange disclaimer on the page.
The Tax Foundation writes: “Although the property tax is the principal source of revenue for localities, broad consensus has not been reached on the basic issue of whether property taxes are regressive, proportional or progressive.”
I’m not sure what they mean by “broad” consensus, so I’ll settle for a simple statement: The property tax is regressive. Period.
In Wisconsin, the issue has been well-examined twice in the 21st century, first by a team assembled by the Department of Revenue, and most recently by Rebecca Boldt, Bradley Caruth, and Andrew Reschovsky.
The Department of Revenue released its Wisconsin Tax Incidence Study in 2004. Among its conclusions: “The sales, property and utility taxes are regressive for most households. The property tax places the largest burden on most households, particularly low-income households.” (p. 75)
Boldt, Caruth and Reschovsky (the first two from the Department of Revenue, the latter from the University of Wisconsin-Madison) released their paper, Exploring Changes in Homeowner Property Taxes in Wisconsin, 2000 to 2005, in 2009. They found that even after accounting for the various property tax credit breaks, “the tax remains regressive, with the lowest quintile paying 5.9 percent of their income in property taxes, more than double the overall average and 3.7 times more than the highest-income households, which paid 1.6 percent of their income in net property taxes over the period.”
Conclusion: D.C., where the Tax Foundation is based, may be an unusual place. But in Wisconsin, the property tax is definitely regressive.
