June 14, 2012
The right’s talk-radio gabbers and cable-news blowhards are
disappointed. Voters torpedoed Measure
2, a ballot initiative to eliminate property taxes in North Dakota.
It’s tempting to declare any tax-axing a beautiful thing. But true
to form, the national conservative media, mired in sound bites and talking
points, failed to dig deeper. There were compelling reasons for deep-red North Dakotans to reject the
Most importantly, the initiative was no tax cut. Since it didn’t
compel the zeroing-out of a single “public” expenditure, it was a tax shift. Measure 2 barred North Dakota’s “counties,
cities, townships, school districts, park districts, water districts,
irrigation districts, fire protection districts, soil conservation districts,
and other political subdivisions” from collecting property taxes. “[S]tate
sales taxes, individual and corporate income taxes, oil and gas production and
extraction taxes, tobacco taxes, lottery revenues, financial institutions
taxes, and other state resources” were to step in as substitutes.
If you live in a region with a tradition of strong home rule, North Dakota’s proposed switcheroo
sounds awfully dodgy. For decades, districts, towns, cities, and counties have increased
their dependency on state capitals and Washington.
“Free” money proved too enticing for selectmen, councilmen, mayors, and
commissioners to resist. Property taxes once furnished the bucks for nearly all
spending by municipalities and counties. Today, their share
has dwindled to 28 percent.
That’s a regrettable decline in financial self-sufficiency.
Public-employee wages and benefits are easier to boost when local taxpayers contribute
a small part of the added cost. Trendy, and counterproductive, education fads
are more attractive when financed by a “millionaire’s tax” at the state level. And
revenue” comes intergovernmental strings.
Give Measure 2’s crafters credit for anticipating the loss-of-autonomy
argument. The initiative’s text included a provision that the enhanced lucre
that would soon gush from Bismarck was
to be spent “at the sole direction” of local governments. But state pols would
still decide the value of the grants for
schools, roads, police protection, firefighting, and the like. As a Mandan resident
noted, if successful, the measure would have prompted “endless expensive
lawsuits over funding formulas perceived to be unfair.”
The activists behind North
Dakota’s voter-vetoed experiment relied on a simple
truth. As a reporter for The Philadelphia
Inquirer quipped, Americans are divided on the property tax: “Half … hate
it, and the other half really, really hate it.” Hyperbole it is not -- the Tax
Foundation’s Joseph Henchman blogged that his
organization’s “surveys and polls … have consistently shown that the property
tax is the most hated tax in America.”
Why does a levy that raises less
than a third of the revenue consumed by just one level of government generate such venom? Because most of the
folks who pay property taxes do so knowingly, in annual or semiannual sums. Taking
a big honkin’ load out of your checking account, all at once, stings far worse
than the plodding, almost imperceptible accrual of income- and sales-tax
The property tax’s high visibility is the reason why so many
bureaucrats and career politicians prefer paycheck
withholding and micro-filching
consumer purchases. The strategy was best articulated by Mobutu Sese Seko, the
African despot, in a lecture to his kleptocratic flunkies: “If you steal, do
not steal too much at a time. You may be arrested. Steal cleverly, little by
The property tax steals big, and that’s why liberty-lovers
should not only embrace it, but work to restore its role as the prime funder of
local government. By directly dunning every homeowner and businessman -- and in
many states, everyone who drives a car -- the levy creates a broad constituency
for smaller, cheaper government. In places where property taxes cover the bulk
of on-the-ground “public services,” taxpayers regularly encounter what they’re
forced to support. Joe Sixpack and Jane Diet Coke find it difficult to gauge
the cost-effectiveness of prisons, commuter-rail lines, arts subsidies, and missile-defense
systems. But they notice when roads are poorly snowplowed, cops are slow to
respond to 911 calls, the fire department is overstaffed, softball fields are unkempt,
and code-enforcement officers enjoy their jobs a bit too much.
Measure 2 offered further evidence that dim-bulb populism on
the right can be nearly as dangerous as vacuous tubthumping on the left.
property tax isn’t a villain. It’s despised due to its method of
collection, not inherent “unworkability” or “unfairness.” And the best way to reduce
the property tax’s unquestionably
onerous burden is to make local government affordable through privatization,
competitive contracting, and right-sizing employee compensation.
D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.
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