Those Wild, Wild Property Taxes

As more and more homeowners are bitterly learning, the Achilles' heel in the family housing budget may not be mortgage payments or heating costs or even that unexpected leak in the roof, but property taxes. Such taxes have risen an average of 76% since 1970, and 136% since 1967. The spiral has been caused in part by expansion of local public services, but more by the enormous inflation-sparked increases in the wages and benefits of teachers, policemen and firemen, and even the maintenance of local roads. Some examples:

Veterinarian George Beatty operates a small animal hospital on a 1 1/4-acre plot in the Chicago suburb of Palatine, Ill. This year his real estate taxes jumped from $4,200 to $14,000 to help pay for a new school. "I don't mind paying taxes if they are reasonable," he moans, "but this is ridiculous."

Taxes on the West Los Angeles home that Ethel and Ralph Littrell paid $50,000 for in 1961 have risen an average of almost 33% a year, and the last increase earlier this summer seems to knock them out of the game. They have three months to come up with half of their newest tax bill--$5,000 a year--and are already preparing for the shock of having to sell out if they fail.

James H. Mitchener's 19-year-old row house on Baltimore's Limit Avenue brought him to the limit of his patience last year after his taxes jumped from $6,920 to a breathtaking $11,740 as a result of the city's first systematic citywide reassessment. When he asked for a rollback, his request was denied, though assessments on office buildings, hotels and department stores in the city have been reduced to keep business from fleeing.

Homeowners are not yet ready for open revolt, but growing numbers are howling bloody murder. California's United Organization of Taxpayers claims a membership of more than 70,000 and is pushing to get a petition for property tax reductions on the state ballot. Just under 500,000 signatures are needed; the organization fell only 1,427 short of collecting that many earlier this year. In Washington, D.C., where assessments have jumped 75% in the past four years, furious homeowners forced the city council in July to pass acts that exempt the aged, blind and disabled from some of the increases, and to lop $6,000 off the assessed value of every single-family house. In the upstate New York hamlet of Hardenburgh, residents have dodged the assessor by joining a California mail-order outfit called the "Universal Life Church" and declaring their homes to be churches; they qualify for an exemption on the basis of the U.S. Constitution, which has been interpreted to prohibit the taxation of religious property.

The growing chorus of protests highlights the numerous inequities in the system. In communities that have no sales or income levies, property owners are grossly overtaxed. Boston has no other local taxes, and homeowners pay the highest tax rate in the country--$252.90 per $1,000 of assessed valuation. Though Boston assesses property at one-third its true market value, the effective rate is a whopping 8 1/2%, a level even city officials admit is virtually confiscatory.

The system can also produce odd results when the taxes on one home are compared with those of a dwelling just down the street. A number of communities tax houses on the basis of their original value. A grand old home might have lower taxes than a brand new house of lesser quality. Some districts, such as Cook County, Ill., and Fulton County, Ga., are attempting to eliminate the imbalance by taxing all homes at their current "fair market value," but then taxes explode and devastate longtime residents living on fixed incomes. Says Ren Wicks, 65, who, as a result of a $4,000 annual property tax bite, is now struggling to make ends meet on his Los Angeles home: "They told me that if I worked hard and was a good citizen, I could make it in this country. They were wrong. They didn't tell me that the rewards were to throw me out of my home."

Reform is difficult to achieve so long as the property tax is the main source of revenue for most local governments--and attempts to replace it in that role by enacting sales or income taxes or making existing ones higher also excite bitter resistance. The best short-term hope remains relentless pressure on local governments to hold down spending. So long as property taxes continue to rise more rapidly than family incomes, many a homeowner no longer can be certain that his house will indefinitely remain his castle.

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