Our “First Principles Series” is an ongoing awareness effort by Beacon to restore our nation’s commitment to those principles of free markets, individual liberty, and limited government that have made America the best nation in the history of the world. Often, politicians eager to appease constituents can stray from these principles. And voters can be misled into believing that policies violating these principles are in their best interest when they’re not. This series is designed to set the record straight and make the case for standing up for our most important principles, even when it might be politically expedient to ignore them. Read our entire “First Principles Series” here.
Property taxes are the bane of homeowners’ existence. You work hard to finally buy a home, and then you never really own it. Year after year, you fork over more money to the government, even after you’ve paid off your mortgage. No matter if you can’t afford the increases in property taxes. If you don’t pay, the government will seize it all.
Yet property taxes comprise more than half of county governments’ revenue in Tennessee, even more than sales taxes, on which Tennessee relies heavily at both the state and local levels. Because of those sales taxes, property taxes have generally remained fairly low here compared to other states. But that is changing.
Jacked Up. Just this year, dozens of local governments have raised property taxes on their residents. And it’s not just modest cost of living adjustments taxpayers face. Nashville recently raised property taxes by 26%, Kingsport by 24%, and Mt. Juliet by a whopping 164%. More and more cities, counties, and school districts are raising property taxes at alarming rates. All told, Tennessee taxpayers will pay millions more in property taxes this year than last.
One reason this can happen is because, unlike most states, Tennessee lacks any sort of limit on property tax hikes. In fact, 46 other states impose some restriction on local governments’ ability to raise property taxes on residents. Tennessee joins Hawaii, Vermont, and New Hampshire as the outliers where property taxes can go up without limit.
This isn’t just about having to pay more in taxes. Because property taxes are tied to a person’s home, they directly impact Tennesseans’ fundamental ability to provide their family with shelter. While Tennessee has a property tax freeze program for seniors, the income level to qualify is extremely low. Lower- and middle-income homeowners still face being priced out of their homes due to property taxes. Even if their property values have gone up, it’s not easy to convert that equity into cash to pay their property taxes. That’s why many homeowners, like Nashville resident Gary Hoffman, legitimately fear losing their homes due to rising property taxes.
Give Voters a Say. Some states—like Florida—are debating eliminating this unfair tax altogether. Short of that, the simplest and most effective way to protect property owners is to restrict local governments’ ability to raise overall revenue year-over-year, at least by more than a set amount, say inflation or 2%. An even more palatable solution is to pair this limitation with a referendum trigger. In this scenario, local governments could raise taxes modestly to cover for inflationary cost increases, and anything more than that could be approved by voters at the ballot box.
This is one way Tennessee lawmakers could join the other 46 states that protect property owners against massive tax hikes. And it’s the least they can do when Florida is talking about outlawing property taxes altogether.