I’ll be honest with you: I rent. I’ve never thought nor cared about property taxes until recently, and I’ve never had a property tax bill plop on the table with the rest of my mail. I’ve never owned a home. I’ve never even tried to buy a home. So why on earth would I care about property taxes? Hint: It’s not because I might buy a home one day.
I care about property taxes as a renter because the tax appraisal system affects all of us, even non-homeowners. There are a few main reasons, and perhaps you can think of more, but these are some of the core thoughts that come to my mind about why my fellow renters should be thinking about property taxes:
Reason #1: Property Taxes = Local Governments’ Largest Funding Source
Property taxes are the number one source where local governments accumulate a cash flow for public investments such as schools, community areas, parks, fire protection, street maintenance, and so on.
Each dollar that is collected through property taxes will directly affect the wellbeing and functionality of a community. For instance:
If the system does not collect enough funds, public necessities may end up being insufficiently funded. This could affect the community in so many ways depending on the specific situation and how each local government tends to spend their property tax collection. Maybe there isn’t enough money for parks, so the community lacks in third places; or there isn’t enough money to sufficiently fund a school, so attending children grow up with a lackluster education. The possibilities are endless and some of these effects have the potential to linger in the long term.
If the system over-collects, then homeowners become overburdened, causing a wide array of problems. There’s many cases throughout the United States where individuals have been illegally charged on their property taxes and end up paying much more than they should.
Either way, property taxes are likely to affect the wellbeing of local residents, as well as the community’s financial stability on both an individual and government level.
Reason #2: You Pay Property Taxes, Even as a Renter
Most landlords will likely use your rent to cover property taxes. So even if you’re not receiving the bill directly, there’s a pretty good chance a part of your rent is contributing to it. If property taxes increase, depending on your landlord, your rent just may be the avenue for covering those rising costs.
In other words, you’re personally investing in local property taxes—even as a renter.
Reason #3: Most Property Tax Systems Are Filled With Inequities
Property tax inequities are a national issue—they are integrated throughout our entire system, as demonstrated in extensive reports by Dr. Christopher Berry of the University of Chicago. In his research, he shows that throughout the United States, the property tax burden has been shifted from owners of more expensive homes to people who own less-expensive homes.
When we are not accurately assessing properties, in most cases we end up subsidizing the rich. In Buncombe county, NC, the data analytics firm Urban3 calculates that the county is losing out on $5.5 million due to inaccurate property tax appraisals for residential real estate. On the other side of the inequities coin: In Cook County Illinois, from 2011 to 2015, inequities in property assessment resulted in the improper billing of $2.2 billion in property taxes.