These problems persist. A recent report by the University of Chicago’s Harris School of Public Policy found that property assessments were regressive (meaning lower-valued properties were assessed higher relative to value than higher-valued ones) in 97.7 percent of all U.S. counties. Black-owned homes and properties in Black neighborhoods continue to be devalued on the open market, making this regressive tax, in effect, a racist tax.
The overtaxation of Black homes and neighborhoods is also a symptom of a much larger problem in America’s federated fiscal structure. By design, this system produces winners and losers: localities with ample resources to provide the goods and services that we as a nation have entrusted to local governments, and others that struggle to keep the lights on, the streets paved, the schools open and drinking water safe. Worse yet, it compels any fiscally disadvantaged locality seeking to improve its fortunes to do so by showering businesses and corporations with tax breaks and subsidies while cutting services and shifting tax burdens onto the poor and disadvantaged. A local tax on local real estate places Black people and cities with large Black populations at a permanent disadvantage. More than that, it gives middle-class whites strong incentives to preserve their relative advantages, fueling the zero-sum politics that keeps Americans divided, accelerates the upward redistribution of wealth and impoverishes us all.
There are technical solutions. One, which requires local governments to adopt more accurate assessment models and regularly update assessment rolls, can help make property taxes fairer. But none of the proposed reforms being discussed can be applied nationally because local tax policies are the prerogative of the states and, often, local governments themselves. Given the variety and complexity of state and local property tax laws and procedures, and how much local governments continue to rely on tax reductions and tax shifting to attract and retain certain people and businesses, we cannot expect them to fix these problems on their own.
The best way to make local property taxes fairer and more equitable is to make them less important. The federal government can do this by reinvesting in our cities, counties and school districts through a federal fiscal-equity program, like those found in other advanced federated nations. Canada, Germany and Australia, among others, all direct federal funds to lower units of government with lower capacities to raise revenue.
And what better way to pay for the program than to tap our wealthiest, who have benefited from our unjust taxation scheme for so long. President Biden is calling for a 25 percent tax on the incomes and annual increases in the values of the holdings of persons claiming more than $100 million in assets, but we could accomplish far more by enacting a wealth tax on the 1 percent. Even a modest 4 percent wealth tax on people whose total assets exceed $50 million could generate upward of $400 billion in additional annual revenue, which should be more than enough to ensure that the needs of every city, county and public school system in America are met. By ensuring that localities have the resources they need, we can counteract the unequal outcomes and rank injustices that our current system generates.