Property Tax Ranking Shakes Conventional Wisdom On ‘Taxachusetts’

 In a new ranking of property taxes across the states,
Massachusetts’ ranking may surprise you when
compared to its NE neighbors. ~ Shutterstock image

by Peter Ingemi: The Tax Foundation’s new map on property taxes across the states may come as a shock to conventional wisdom. Texas, for example, has a reputation as a low tax state compared to California, yet Texas has the sixth highest effective property tax rate in the nation, with California at 34th. Hawaii is a small state and has some of the most desirable property in the entire country, yet their effective property tax rate is the lowest in the entire United States.

However the biggest shock comes from the Northeast, in a state commonly referred to as “Taxachusetts.”

While few would be surprised that 5 of the 10 states with the highest effective property tax rates in the nation are in the northeast–NJ at #1, NH at #3, CT at #4, VT at #9, and RI at #10–I suspect many people would be surprised to hear that of all the states northeast of the Mason Dixon line, the one with the lowest effective property tax rate is, in fact, Massachusetts, at 18th.

In fact, a complaint one regularly hears from former Massachusetts residents who have relocated to New Hampshire are the high property taxes they are now paying. It remains one of the few edges we have over our northern neighbor without a sales or an income tax.

The source of this advantage is from a law passed by referendum 35 years ago called Proposition 2 ½. The proposition put specific limits and caps on any increase in property taxes in a community. As the Massachusetts Department of Revenue explains online:First, a community cannot levy more than 2.5 percent of the total full and fair cash value of all taxable real and personal property in the community. In this primer we will refer to the full and fair cash value limit as the levy ceiling.

Second, a community’s levy is also constrained in that it can only increase by a certain amount from year to year. We will refer to the maximum amount a community can levy in a given year as the levy limit. The levy limit will always be below, or at most, equal to the levy ceiling. The levy limit may not exceed the levy ceiling.The formula for the levy ceiling looks like this:Full and Fair Cash Value x 2.5% = LEVY CEILING
Full and Fair Cash Value = $100,000,000
$100,000,000 x 2.5% = $2,500,000So if property values in a part of the city increase, their rate might go up over 2 ½ percent, but it cannot go up more than 2 ½ percent of the full and fair cash value of the taxable real and personal property of a city.

This means that if a city wants to push a big public project or wants to maintain high expenditures, they can’t do it without giving the taxpayers who would have to pay it a direct say.

Proposition 2 ½, made it on the ballot despite the strong opposition of both the unions and the Legislature. After it passed overwhelmingly with 59 percent of the vote, every teacher at school was given a pink slip, yet one year later, all the teachers were still there.

You might be surprised to hear that regular attempts at the local level to override Prop 2 1/2 are quite common in the state. In 2008, for example, the Boston Globe published this list of attempted overrides. In fact, the people of Belmont, MA approved another override this year.

Would the Massachusetts citizens who fought and died for the principle of “No taxation without representation” be pleased with its ranking in the report? It’s all relative.
---------------
Peter "DaTechGuy" Ingemi is a contributor to Watchdog Arena, Franklin Center’s network of writers, bloggers, and citizen journalists. He has covered presidential, senatorial, congressional and state campaigns across the country with his trademark Fedora & Dr. Who scarf.

---

Tags: Peter Ingemi, property taxes, Tax Foundation, new map, property taxes, Massachusetts, Taxachusetts, To share or post to your site, click on "Post Link". Please mention / link to the ARRA News Service. and "Like" Facebook Page - Thanks!