OPINION:
Vice President Kamala Harris has a counterproductive idea for making housing more affordable: Throw taxpayer money at the problem. That’s all but guaranteed to make housing more expensive by encouraging sellers to raise prices, knowing that taxpayers will foot the bill.
There’s a better way to boost affordability, and it doesn’t hinge on the presidential election. Instead of waiting for Washington to waste more taxpayer money, states can relieve homebuyers from property taxes.
In most of America, property taxes are out of control. Local governments generally set tax rates, and in 2021, they raked in more than $600 billion — a 141% increase in just 20 years — with further increases in the past three years. In 2023 alone, property tax revenue grew by 7% nationwide. The typical American is paying 25% more in taxes than before the pandemic.
Most of this growth came from increased assessments on property values, not higher tax rates, but that’s a distinction without a difference. A family that earned the same income in 2022 and 2023 is paying more in taxes without making more money, which hits the same as a tax increase.
The average homeowner now pays more than $4,000 a year — enough to cover four months’ worth of groceries for a family of four or two years of cable and internet service. The annual tax burden in some states is at least twice that painful. New Jerseyans pay an average of $8,600 to live in their homes. Illinois homeowners fork over more than $9,000, year after year, without fail.
Do cities really need so much of their residents’ money? Hardly. As I show in a new report, local governments waste much of their property tax windfall. Across the country, cities spend millions of dollars on diversity, equity and inclusion projects and smart garbage cans that cost more than $20,000 each. San Francisco allocated $1.7 million to build a public toilet and sink, even planning a taxpayer-funded launch party to celebrate them.
The explosion in tax revenue has also empowered cities to boost education spending without paying attention to whether students actually learn. In New York and Atlanta, the cost of educating each student is higher than the cost of a college education.
In the Big Apple, the typical public school student costs $38,000 a year — enough for four years at a public university. Yet for all that money, just 33% of New York students are proficient at reading. Why are homeowners paying so much for such abysmal outcomes?
Nationwide, cities are spending over $1 trillion more than they did in 2001. Yet while cities splurge, their residents suffer. As home values rise, residents pay more money to local officials, who promptly waste it. Those who already own homes can find it difficult to stay in them. And those who want to buy homes find their dream pushed further out of reach.
Few cities will tackle this crisis independently, so state leaders should come to the rescue. They have options to give homeowners and homebuyers relief.
They could limit tax increases when home values go up so that even when values rise significantly, taxes don’t. They could also cap taxes for homes at a specific dollar value, so residents don’t have to worry about future tax increases. States could ban local governments from raising property tax rates altogether. That would provide families with both long-term certainty and affordability.
Some states have enacted this policy patchwork, but more should do so. When it comes to getting housing prices under control, property tax relief is a crucial part of the equation. It would have the added benefit of forcing local governments to spend their money more wisely since they wouldn’t have a windfall to waste on golden toilets and DEI programs.
Surely that’s better than Ms. Harris’ plan to make housing even more expensive by throwing Americans’ money at the problem. We’ve wasted enough taxpayer dollars as it is. Surely it’s better to let homeowners keep more of their own money.
• Michael Greibrok is a senior research fellow at the Foundation for Government Accountability.
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