The Property Tax:
The Unfairest Tax of All
by Ted Harris
hat can a property owner do to defend against ever increasing assessed property values and tax rates?
Answer: Not much. You can protest all you like; you can take your wrath out on the tax assessor; but all this does is push your blood pressure into the stratosphere. The problem lies with a system of unfair tax laws and rules. Nevada law allows a tax system with virtually no limit as to what cities and counties can extract from you each year. It is a system that has no regard for the income of the property owner or his ability to pay.
Property taxes have become confiscatory. They destroy the right to own propertythe cornerstone of a free society. Without real rights of property there is no freedom. That was one of the founding principles of our nation. Initially, there was no property tax because the founding fathers knew the ability to tax private property would give the government the power to confiscate private property.
Under our current system of taxing property, you can never truly own your property. How can "owners" truly believe they own their homes when they have to pay hundreds or thousands of dollars per year in property taxes for the privilege of living in their own houses? Just try not paying your taxes and you will soon find a new name on your deed.
The property tax differs from all other taxes we pay in that there is no practical limit as to how much your annual assessments can increase. The current Washoe County tax rate is $3 plus-or-minus per $100 of assessed value. The so-called "tax rate limit" of $3.64 is so high that, if reached, it would bankrupt many people or force them to give up their homes. Most taxes you pay are legally specified and predictable. If you earn a certain income, the federal law specifies what percentage you will pay. If you buy a car, you know in advance what the sales tax will be. No such rule applies to property taxes. You have no control over assessed values and very little control over the city and county "tax rates." You are, therefore, forever faced with exponentially increasing property taxes. Why should anyone be forced to give up a home for which he or she may have worked a lifetime in order to pay for excessive government spending programs that have little to do with providing property-related services?
Washoe County is a prime example of the tax and spend philosophy. Inflation over the last four or five years has been running between 2 percent and 3 percent. Yet the county budget, over that same period, has increased by almost 30 percent! Why is it that we must live on a limited budget with limited pay increases while the government gets a blank check on our accounts? The answer is obvious. The reason county spending increases is because it can. Government has an insatiable appetite to keep growing. There is no lack of demand by special interest groups for programs that have nothing to do with police, fire, roads, and libraries.
Property tax reform is desperately needed and long overdue. We depend on our elected representatives to control government growth and spending. However, instead of working to limit tax increases, they are being encouraged to move in the opposite direction. The upcoming 1999 Legislature is being asked to raise property taxes in several creative ways. For example, one bill asks that school bond debt (about 40 cents) be removed from the $3.64 property tax cap. This bill would allow counties to increase the tax rate by another 40 cents per $100, increasing the cap to over $4.00. A tax rate cap is a useless commitment because it can be changed at will without a vote of the people. In addition, there is pressure to reduce the allowed depreciation on your home by one third, from 1.5 percent to 1 percent. Just how much more can the defenseless property owner take?
There is a movement across America to do something about the gross unfairness of the property tax system. For example, our neighbors in California and Oregon have succeeded with constitutional initiatives to limit property taxes. California succeeded in 1978 with Proposition 13, which limits the property tax to 1 percent of market value and limits increases in assessed value to 2 percent per year. In 1998 Oregon voters overwhelmingly approved a constitutional amendment limiting property tax increases to 3 percent per year or the amount of inflation, whichever is less. Additionally, both of these states amendments require a two-thirds majority vote to increase taxes.
Nevada also succeeded with a "Prop 13" referendum in 1978. This amendment passed with 70 percent voter approval the first time but failed to pass a second time. An unusual quirk in Nevada law requires that a constitutional amendment must pass in two general elections. Seeing the handwriting on the wall, our elected representatives promised the taxpayers legislative reform that would limit tax increases. The voters believed them and the amendment failed the second time around in 1980. Unfortunately, the property owners were sold a bill of goods. History shows the poorly structured reforms failed to limit tax increases for anyone during the next 18 years.
Many homeowners have seen their property taxes double, triple and quadruple over just the last eight years. The authors property tax has quadrupled since 1990; a compound annual 14.5 percent increase. Recent news articles report the cries of a revenue shortfall of millions of dollars in state, city, county and school budgets. There are two options in responding to these fiscal problems: either cut spending or raise taxes. Want to guess what the most likely solution will be?
The folks in California and Oregon worked long and hard to get legislative property tax reform, but all they got from the political establishment and elected officials was lip service. Nothing happened until the voters took matters into their own hands and, in the end, it took a tax revolt to get the needed reform.
Is it time for the people of Nevada to follow the example of Oregon and California in true property tax reform? Many property owners would say yes. They are mad as hell, and theyre are not going to take it anymore. NJ
Ted harris, active in Washoe County school reform and property rights issues, lives in Incline Village. He can be reached by e-mail at email@example.com or by phone at (775)831-3914.