Speaking up for property taxes.

• Author: Snell, Ron
• Position: Letters and Books - Book Review

Local Tax Policy: A Federalist Perspective by David Brunori, Urban Institute Press, Washington, D.C., 2003. 162 pages, $26.50. Order from the Urban Institute Press, (202) 261-5687.

David Brunori is an editor of State Tax Notes, a frequent speaker at NCSL meetings and a faculty member at George Washington University. His recent books address the link between state and local tax policy and government's ability to function. He noted in an earlier book, State Tax Policy, "a surprising disconnect between providing public services and raising the revenue to pay for those services plagues the government sector."

The focus of Local Tax Policy: A Federalist Perspective is the central role local government plays in American life and the conditions that have to be met for it to continue to do so. Americans favor local government and not just for sentimental reasons. Local governments are efficient at providing services, are directly responsive to citizens, foster democracy, and (he might have added) are the school for developing state and national political leaders. The effectiveness of local government depends on fiscal autonomy--"the ability to raise of lower taxes to provide the necessary level of services at prices citizens are willing to pay." Local governments' power to raise the revenues they need has been declining for decades, eroding their strength and responsiveness.

Property tax is the revenue source that best suits the needs of local government. Brunori reviews the other kinds of revenues available in various states--state aid, sales and use taxes, income and wage taxes, business taxes, fees and charges, He demonstrates that none of them provides the certainty, flexibility and responsiveness to local preferences as does the property tax. State aid is likely to be inadequate, inflexible, likely to fade when states are in fiscal difficulties (just when local governments need it the most) and can erode local independence.

Sales taxes are levied on a falling tax base, and breed undesirable competition between local governments. Income, wage and business taxes are impractical for most local governments and are allowed in only a few states.

Charges and fees are efficient ways to finance some local services, but they have largely been used too much. Local governments have little opportunity to expand them.

That leaves the property tax, which, Brunori emphasizes, is not for lack of anything better, but the best possible revenue for...