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IT’S TIME TO END THE QUIET CRUELTY OF PROPERTY TAXES  
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Andrew W. Kahrl
April 11, 2024
New York Times
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_ Property taxes, the lifeblood of local governments and school
districts, are among the most powerful and stealthy engines of racism
and wealth inequality our nation has ever produced. _

, Eli Durst

 

Property taxes, the lifeblood of local governments and school
districts, are among the most powerful and stealthy engines of racism
and wealth inequality our nation has ever produced. And while the
Biden administration has offered many solutions for making the tax
code fairer, it has yet to effectively tackle a problem that has
resulted not only in the extraordinary overtaxation of Black and
Latino homeowners
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also in the worsening of disparities between wealthy and poorer
communities. Fixing these problems requires nothing short of a
fundamental re-examination of how taxes are distributed.

In theory, the property tax would seem to be an eminently fair one:
The higher the value of your property, the more you pay. The problem
with this system is that the tax is administered by local officials
who enjoy a remarkable degree of autonomy and that tax rates are
typically based on the collective wealth of a given community. This
results in wealthy communities enjoying lower effective tax rates
while generating more tax revenues; at the same time, poorer ones are
forced to tax property at higher effective rates while generating less
in return. As such, property assessments have been manipulated
throughout our nation’s history to ensure that valuable property is
taxed the least relative to its worth and that the wealthiest places
will always have more resources than poorer ones.

Black people have paid the heaviest cost. Since they began acquiring
property after emancipation, African Americans have been overtaxed by
local governments. By the early 1900s, an acre of Black-owned land was
valued, for tax purposes, higher than an acre of white-owned land in
most of Virginia’s counties, according to my calculations, despite
being worth about half as much. And for all the taxes Black people
paid, they got little to nothing in return. Where Black neighborhoods
began, paved streets, sidewalks and water and sewer lines often ended.
Black taxpayers helped to pay for the better-resourced schools white
children attended. Even as white supremacists treated “colored”
schools as another of the white man’s burdens, the truth was that
throughout the Jim Crow era, Black taxpayers subsidized white
education.

Freedom from these kleptocratic regimes drove millions of African
Americans to move to Northern and Midwestern states in the Great
Migration from 1915 to 1970, but they were unable to escape racist
assessments, which encompassed both the undervaluation of their
property for sales purposes and the overvaluation of their property
for taxation purposes. During those years, the nation’s real estate
industry made white-owned property in white neighborhoods worth more
because_ _it was white. Since local tax revenue was tied to local
real estate markets, newly formed suburbs had a fiscal incentive to
exclude Black people, and cities had even more reason to keep Black
people confined to urban ghettos.

As the postwar metropolis became a patchwork of local governments,
each with its own tax base, the fiscal rationale for segregation
intensified. Cities were fiscally incentivized to cater to the
interests of white homeowners and provide better services for white
neighborhoods, especially as middle-class white people began streaming
into the suburbs, taking their tax dollars with them.

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One way to cater to wealthy and white homeowners’ interests is to
intentionally conduct property assessments less often. The city of
Boston did not conduct a citywide property reassessment between 1946
and 1977. Over that time, the values of properties in Black
neighborhoods increased slowly when compared with the values in white
neighborhoods or even fell, which led to property owners’ paying
relatively more in taxes than their homes were worth. At the same
time, owners of properties in white neighborhoods got an increasingly
good tax deal as their neighborhoods increased in value.

As was the case in other American cities, Boston’s decision most
likely derived from the fear that any updates would hasten the exodus
of white homeowners and businesses to the suburbs. By the 1960s,
assessments on residential properties in Boston’s poor neighborhoods
were up to one and a half times as great as their actual values, while
assessments in the city’s more affluent neighborhoods were, on
average, 40 percent of market value.

Jersey City, N.J., did not conduct a citywide real estate reassessment
between 1988 and 2018 as part of a larger strategy for promoting
high-end real estate development. During that time, real estate prices
along the city’s waterfront soared but their owners’ tax bills
remained relatively steady. By 2015, a home in one of the city’s
Black and Latino neighborhoods worth $175,000 received the same tax
bill as a home in the city’s downtown worth $530,000.

These are hardly exceptions. Numerous studies conducted during those
years found that assessments in predominantly Black neighborhoods of
U.S. cities were grossly higher relative to value than those in white
areas.

These problems persist. A recent report by the University of
Chicago’s Harris School of Public Policy
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that property assessments were regressive (meaning lower-valued
properties were assessed higher relative to value than higher-valued
ones) in 97.7 percent of U.S. counties. Black-owned homes and
properties in Black neighborhoods continue to be devalued
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the open market, making this regressive tax, in effect, a racist tax.

The overtaxation of Black homes and neighborhoods is also a symptom of
a much larger problem in America’s federated fiscal structure. By
design, this system produces winners and losers: localities with ample
resources to provide the goods and services that we as a nation have
entrusted to local governments and others that struggle to keep the
lights on, the streets paved, the schools open and drinking water
safe
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Worse yet, it compels any fiscally disadvantaged locality seeking to
improve its fortunes to do so by showering businesses and corporations
with tax breaks and subsidies while cutting services and shifting tax
burdens onto the poor and disadvantaged. A local tax on local real
estate places Black people and cities with large Black populations at
a permanent disadvantage. More than that, it gives middle-class white
people strong incentives to preserve their relative advantages,
fueling the zero-sum politics that keep Americans divided, accelerates
the upward redistribution of wealth and impoverishes us all.

There are technical solutions. One, which requires local governments
to adopt more accurate assessment models and regularly update
assessment rolls, can help make property taxes fairer. But none of
the proposed reforms
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discussed can be applied nationally because local tax policies are the
prerogative of the states and, often, local governments themselves.
Given the variety and complexity of state and local property tax laws
and procedures and how much local governments continue to rely on tax
reductions and tax shifting to attract and retain certain people and
businesses, we cannot expect them to fix these problems on their own.

The best way to make local property taxes fairer and more equitable is
to make them less important. The federal government can do this by
reinvesting in our cities, counties and school districts through a
federal fiscal equity program, like those found in other advanced
federated nations. Canada, Germany and Australia, among others, direct
federal funds to lower units of government with lower capacities to
raise revenue.

And what better way to pay for the program than to tap our wealthiest,
who have benefited from our unjust taxation scheme for so long?
President Biden is calling for a 25 percent tax on the incomes and
annual increases
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the values of the holdings of people claiming more than $100 million
in assets, but we could accomplish far more by enacting a wealth tax
on the 1 percent. Even a modest 4 percent wealth tax on people whose
total assets exceed $50 million could generate upward of $400 billion
in additional annual revenue, which should be more than enough to
ensure that the needs of every city, county and public school system
in America are met. By ensuring that localities have the resources
they need, we can counteract the unequal outcomes and rank injustices
that our current system generates.

_Dr. Andrew W. Kahrl is a professor of history and African American
studies at the University of Virginia and the author of “The Black
Tax: 150 Years of Theft, Exploitation, and Dispossession in
America.”_

 

* tax fairness
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* Racism
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* private property
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* low income neighborhoods
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