Posted by on March 13, 2020 10:56 am
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Categories: Taxes

 


By Janson Prieb, American Consumer Institute

 

In Idaho, residents are concerned with rising property taxes, pushing legislators to consider freezing them all together. Meanwhile in Greenville, North Carolina residents are worried about reappraisals that are also raising property taxes. Yet, the solution to lower property taxes should be no mystery. With 30 percent of property taxes going towards education, residents would see lower property taxes if charter schools were implemented, as they require only one-third of the cost. As homeowners across the nation are eager for lower property taxes, charter schools can provide that solution. 

 

Over the past year, many Idaho residents have seen their property taxes soar, and in some cases, by 1,000 percent. Take Jackie Roe, long time Idahoan, who was only paying $100 in property annually when she first bought her house. Last year, she paid $1,500 in taxes and now worries whether she can continue to afford her payments. Yet people like Jackie aren’t alone in fearing they can no longer afford their house as in 2014, Uri Rafaeli lost his home when he underpaid his property taxes by only $8.41.

 

In Washington, D.C. alone, hundreds of people are under threat of losing their homes due to high property taxes. As the average household pays $2,300 in property taxes, 42 percent of Americans say that property taxes are the “least fair tax.” Meanwhile, Idaho legislators should reconsider freezing their property taxes, which West Virginia has tired and shown to be problematic. Lawmakers should instead tackle the root cause of why property taxes are so high to begin with. 

 

Currently, 30 percent of Boise, Idaho’s property taxes go towards education, the second largest piece of the pie. Similarly, out of the $500 billion that is collected nationally in property taxes, $180 billion goes towards education. Local taxes are the primary source for the majority of schools, with an average of 36 percent of education funding coming from property taxes. This means for the average family that pays $2,300 in property tax, $800 of that goes to education. But it doesn’t have to be this way, as school choice programs can provide the same level of education for only a fraction of the cost.

 

Charter schools, for instance, which are publicly funded but have more autonomy than public schools, have proven to be a reliable option. On average, charter schools receive 27 percent less funding per student. The 74, an education research organization, reports there is a $13 billion gap between charter and public schools with charters receiving on average $6,000 less per pupil while outperforming students in public schools.

 

But charter schools aren’t the only options available.

 

Vouchers and tax credit scholarship can also be excellent ways to reduce costs, as research from the Cato Institute shows that school choice programs can cost 33 percent less than traditional public schools. As the U.S. spent in 2016 a whopping $600 billion on public schools, $200 billion could’ve been saved had school choice options been implemented. But the savings wouldn’t just help state budgets. The burden on the taxpayer would also decrease, as public education funding would’ve only needed a fraction of the cost. 

 

To rehash, under the current system, 36 percent of a household’s property taxes (about $800) go towards education. School choice programs would lower property taxes to $610, a savings of $190 – more than enough for people like Uri to keep their home. Indeed, as 70 percent of Americans have less than $1,000 in their savings accounts, every dollar saved is a win for consumers.

 

Property taxes are not enjoyable, as they have the potential to take away someone’s home. As legislators in Idaho and beyond look to help their residents keep their homes, school choice is an option that can help. School choice would not only help states stay within budget, but people will also see lower property taxes.

 

As school choice options like charter schools and vouchers cost only a fraction of the cost than public schools, lawmakers would be smart to enact these changes that substantially lower property taxes while maintaining quality education.

 


Janson Q. Prieb is a policy analyst at the American Consumer Institute, an education and research organization. For more information about the Institute, visit www.TheAmericanConsumer.Org or follow us on Twitter @ConsumerPal.