We live in a time when there is a great tension between the property rights of citizens, the tax burdens on citizens and the benefits (or harm) of increased government size and power. The great economic writer Adam Smith asserted that the success of capitalism was based on a "healthy self interest". The power and success of capitalism is in harmony with human nature. Human beings will instinctively end to act in their own self interest. When this is balanced by competition the fule of law and a healthy business cilmate, the result will be consistent economic growth. The obvious role of governments in this process is to create a legal environment which protects our rights as homeowners and the private property rights of businesses and free markets.
Most people would probably not disagree with the premise above. But what is often ignored is the same "healthy self interest" which drives economic activity is alive and well inside the heart and soul of every government bureaucrat. The bureaucrat who says, "My sphere of influence and the size of department should be smaller." is a rare as a snowflake in August. My experience has been that people managing public agencies believe they can benefit the community with more program funding and more employees. As we have consistently witnessed, the result is expedited growth which demands an increasing appetite for additional public revenues. In Kansas, local governments -- counties, cities, school districts, etc. -- are growing at a faster pace than state government. This is not inherently evil, but it requires controls or government will always seek and find ways to increase spending.
Because the foundation of local government is the property tax, it is this tax which seems always to be under the greatest pressure to increase. The property tax has other characteristics which are troubling:
- It has absolutely no relationship to the entity being taxed possessing the ability to pay.
- If you are a responsible owner and consistently improve your property you will very likely increase the value of your property in the opinion of the Appraiser's office and pay higher property taxes regardless of your opinion of the value of your property.
- Property values on residences and some commercial properties are tied to "fair market value". However, the number of appeals each year, combined with widespread complaints about the system indicate ever rising valuations of property are taking their toll on citizen's faith in the system.
- The present system is very burdensome on homeowners living on a fixed income and business owners experiencing tight cash flow or limited profits. A large increase in property taxes can be a personally devastating experience to these citizens.
I am going to propose a constitutional change in the method we use to determine assessed value of all personal property. Our objective being to create a level playing field for all property taxpayers, the system must be the same for all property to avoid shifting the burden from one group to another. The change in the Constitution would appraise all property at its present value until resold in an "arms length" transaction. The yearly increase in assessed value would be limited to the Consumer Price Index-Urban (about 2.5 to 3%) yearly. However, if the market value drops because of market forces, the appraised and assessed value would go down accordingly. When the property next sells the nex appraisaed value would be the sales price of the property. Then the limited on the increase in assessed value would begin for that base.
The growth of government revenues from property taxes would be resuced but they would still enjoy an increase in tax revenues. They would still benefit from rapidly rising housing markets when properties sell while freeing Kansas citizens from spikes in property tax. The burden should be on government to tighten their budgets as necessary, not on residents and businesses to tighten their budgets because of a surprise in their property tax bills.
We must remember that private property rights are foundational to the constitutional protection afforded all of us. Those rights are also essential to the function of our economy. It is just as wrong to take away private property rights through excessive taxation ast hrough improper use of eminent domain.
