However, the freeze currently applies to five towns; income limits and other additional requirements are determined locally. Unlike rate caps, levy limits impose a hard constraint on revenue growth, and have the same revenue effects as imposing both a rate and an assessment limit in concert, though without the inequities and distortions associated with assessment limits. If, however, officials are not particularly accountable to the people—or at least the people do not believe they are—then guardrails on their authority become more alluring. One side contends that government policies are largely constrained by the preferences of the median voter, without whose support elected officials cannot remain in power. Whereas assessment limits are concerned with tax burdens which rise in the absence of any intervention, rate limits are designed to restrict the authority of local government officials to adopt a tax increase. For older Americans living on fixed incomes, the tax can be a concern because of worries over being priced out of their homes. [21] A well-designed tax limitation regime keeps taxes in check across the board, but frequently the result of an assessment limit is merely to shift the tax burden from one class of homeowners to another. Local governments may set asset limits. Assessment limits may also injure these classes of homeowners or would-be homeowners in another, more subtle way. Assessment limits typically impose a constraint in the rate of growth of assessed value, stipulating that annual increases cannot exceed a given percentage (or, sometimes, a certain amount above inflation) unless the property is sold, transferred, or significantly altered. One set of laws would let residents vote on proposals that would cap the value of homes for tax purposes for homeowners in owner-occupied houses. Compared to assessment limits, a rate limit is a more neutral vehicle for tax limitation, because it does not result in substantially similar properties facing radically different tax burdens. The state authorized freezes for eight towns. In Indiana, to cite one example, some taxpayers saw their property taxes rise by more than 75 percent in a single year. We work hard to make our analysis as useful as possible. In California, for instance, transfers of a principal residence to close family members are exempt from reassessment, and those aged 55 or older can transfer the assessed value of their principal residence to a replacement dwelling of equal or lesser value in the same county, or even in another county where permitted by the receiving county. When rate or levy limit regimes contain ballot override provisions, voters frequently consent to higher taxes at the polls, a willingness that some regard as undercutting the central rationale for such limits. [25] Massachusetts Department of Revenue, Division of Local Services, “Levy Limits: A Primer on Proposition 2½” (June 2007): 4-6, http://www.mass.gov/dor/docs/dls/publ/misc/levylimits.pdf. Political scientists have developed a range of theories of governmental action, but two competing models are particularly apt for considerations of property tax limitation regimes: the Leviathan model, and that of effective electoral competition. Denver, CO 80230 Appraised values are only part of what makes your property taxes rise and fall; the biggest step is the next one, when local governments set their property tax rates. Map of the U.S. indicating property tax rankings. [31] If, therefore, aggressive property tax limitations drive localities to shift to alternative revenue options, the net economic effect may be negative.

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