Property Taxes 101 - Guest Column from Rep. Jim Steineke
It’s that time of year again – property tax time. There are few things that Wisconsin residents mutually dislike as much as the property tax. Property tax rates are high and they’re complicat
Even though Assembly Republicans have reduced property taxes for three consecutive years; Wisconsin still has one of the highest average property tax rates in the country. Just how high are property taxes in Wisconsin? According to the Tax Foundation, the state collected $9.6 billion in property taxes in 2012. Per person, this comes out to approximately $1,724, making us the 12th highest in the nation.
In part, property taxes are high because our local governments rely heavily on them. Nearly all of the property taxes collected are used by local governments. The tax amounts for over 50 percent of all local government tax revenue. In comparison to other states, our local governments’ dependence on the property tax is above average.
Property taxes are complicated because five different governments use the tax, and there are two different methods of valuing property that are used to distribute taxes among property owners – the assessed value and equalized value. Another reason for the complexity is that unlike sales or income tax rates which are fixed in state law, property tax rates change each year based on a number of factors.
So, how are our property taxes used? K-12 schools are the largest users of the property taxes. Forty-four percent of all property taxes are directed to local schools. Twenty-seven percent is directed to municipalities, nineteen percent goes to counties, seven percent goes to technical colleges, with the small remainder going to the state.
Of course, we all know that property taxes are necessary for important functions. They provide funding for police and fire protection, sanitation, transportation, and recreation; but we also need to be cognizant of the negative impacts the property tax has on our residents.
Studies consistently identify the property tax as one of the most detrimental factors to economic growth. A recent report compiled by Lieutenant Governor Rebecca Kleefisch and Department of Revenue Secretary Rick Chandler, identified the state’s property tax burden as the number one area of concern faced by all of our working families and small businesses. More specifically, the business property tax is a powerful disincentive to a state’s economy by discouraging business owners from investing in their business.
Assembly Republicans want to continue to hold down taxes this coming session. Last session, we made significant progress by passing $500 million in property tax cuts. This amounted to a typical Wisconsin homeowner saving $131 dollars; but there’s still a long way to go.
As the Governor prepares to unveil the state budget bill, you can rest assured that we will continue to look for ways to lower our overall tax burden. There’s no reason that Wisconsin should continually remain one of the worst states in the nation for property taxes. State government should always be looking at ways to be more efficient and productive. If there’s a way to fund important services without such a heavy reliance on the property tax, then we owe it to ourselves to explore this as a possibility.