Local Tax Policy: A Federalist Perspective
By David Brunori
The Urban Institute Press
2007, 164 pages, $26.50
In Local Tax Policy, David Brunori mounts a spirited defense of a much-maligned source of local revenue--the property tax. Brunori believes that the existence of local government as we know it will be in jeopardy without serious reform. In order to raise and lower taxes in accordance with the service preferences of local constituents, local governments must have fiscal autonomy However, fiscal autonomy is currently lower than ever. As a result, Brunori believes, local government will become incapable of providing service and will increasing cede control to the state. Brunori posits that the only revenue capable of ensuring a strong and vibrant local government is the property tax.
MAKING THE CASE
Brunori first makes the case for local government--that it is an institution worth preserving. Americans favor local government. Political theorists from Jefferson to de Tocqueville to the modern day have recognized the critical role of local government in the United States. Further, local government is routinely shown to be the most trusted level of government. (1) In addition to cultural affinities, there is also a strong logic in support of local government:
* Efficiency. As long as there are variations in tastes and costs, there are clear efficiency gains from carrying out public-sector activities in a decentralized fashion. Decentralization allows services to be matched to the area of provision.
* Political virtues. Opportunities for political participation and choice provided by local communities have inherent value in a democratic society.
* Responsiveness. Local government is more responsive than other levels of government.
* Innovation. Local government is more likely to experiment with public policies.
To provide these benefits, local government must be able to raise its own revenues. Doing so provides local government with the flexibility it needs to respond to citizens, rather than becoming an undifferentiated appendage of the state. To that end, Brunori notes that property tax provides relatively stable revenues and growth. The immobile tax base provides more flexibility in the tax system and more political autonomy than other taxes. Compliance cost and administrative burdens are relatively low. The property tax is a benefits tax--the benefits received from services are linked to revenue. Property tax allows local control....