2021’s Property Taxes by State – WalletHub Study

Property taxes are one of the forms of taxation in the US. Property taxes are a major source of income for local and state governments and are used to fund services such as education, transportation, emergency, parks, recreation, and libraries. The different boards, councils, and legislatures meet to decide the appropriate rates. They hold budget hearings to determine how much money needs to be allocated for providing the various services required by the local community.

Each year, the average American household spends $2,471 on real-estate property taxes plus another $442 for residents of the 27 states with vehicle property taxes. With such high costs, it’s no surprise that more than $14 billion in property taxes go unpaid each year, according to the National Tax Lien Association.

In order to determine who pays the most relative to their state, the personal-finance website WalletHub today released its 2021’s Property Taxes by State report. Their report compares home and vehicle taxes across the nation and features insights from a panel of experts.

Key Stats:

• Hawaii has the lowest real-estate tax, $606, which is 8.9 times lower than in New Jersey, the state with the highest at $5,419.
• Twenty-seven states levy some form of vehicle property tax. Of those states, Louisiana has the lowest, $25, which is 40.5 times lower than in Virginia, the state with the highest at $1,012.
• Blue States have 31.12 percent higher real-estate property taxes, averaging $2,722, than Red States, averaging $2,076.

WalletHub Q & A

Do people consider property taxes when deciding where to move? Should they?

“I am sure they very often do, as it affects the true price to them. They certainly should, as a matter of rational planning,” said Daniel N. Shaviro, New York University.

“I think people should, and typically do, consider property taxes when deciding where to locate their household,” said Stephen Mullin, Drexel University. “But it is important to note 2 things: First, they should absolutely consider what services they get from the jurisdiction for the property tax they will pay. If people think the value of the services they will get (think schools, for example) is greater than the tax they will pay, they will bid up the price of the housing. Second, they should consider the tax rate as much as the tax payment. A low rate on a high value is better than a high rate on a low-value home. Local taxing jurisdictions should understand how people (current and potential taxpayers) view the costs and benefits of the services they provide.”

Should local tax policy be adjusted to rely more or less on property taxes versus other forms of taxation?

“Every state offers a different set of tax options to local communities. Every community relies on property taxes to some degree,” said Mark Skidmore, Michigan State University. “However, I think people do well to consider the “tax-service bundle” they receive from a community. Some people prefer a higher level of public service and are willing to pay higher taxes for it. Others may not want high-level public services and thus prefer a lower tax environment. Communities people tend to avoid are those with high taxes and low services. “

“Oftentimes these communities have very high “legacy costs” such as significant obligations to pay public employee retiree pension and health promises. These communities have high taxes but cannot offer a “competitive” level of public services because of these “legacy costs.”

“That would depend on how much the state or local government is already relying on property taxes,” said Jeffrey Evans Stake, Indiana University Maurer School of Law. “There is an optimum for all taxes. In places where there are no property taxes, yes, they should probably be increased, but very gradually.”

Should certain groups of people be exempt from property taxes or be taxed at a lower rate?

“One downside of property taxes is that they can sometimes be difficult for people with fixed incomes,” said Stephanie Leiser, University of Michigan. “Appreciation in home values can result in higher property tax bills, but it does not translate to more liquid resources for homeowners. This is why many states have "circuit breaker" programs for lower-income and elderly taxpayers to ensure that their property taxes do not exceed a certain percentage of their annual incomes.”

“A strong argument can be made that those properties that were adversely impacted by redlining should have some type of exception from property tax,” Natasha N. Varyani, New England Law | Boston. “This can get complicated because of the way that some neighborhoods and communities that were impacted have since been gentrified. This is a complex and nuanced question about righting historic and legal wrongs that is full of questions about values and scope that should be left to a thoughtful, representative deliberative body.”

To view the full report and your state’s rank, please visit:

https://wallethub.com/edu/states-with-the-highest-and-lowest-property-taxes/11585

Courtesy: WalletHub