Across America, local communities operate on what could be called a “budget first, taxes after” model, which allows districts to decide what they want to spend and then get property owners to pay up. There’s a better way, though, and Florida could lead the way.

The Epoch Times published an opinion piece entitled “Florida is Rethinking Property Taxes.” The essay correctly states the problem with the property tax:

In Florida, as in the other states, various units of government spend a lot of money, and they have to raise that revenue somehow. With heavy government spending firmly entrenched in American society, reducing the overall tax burden is problematical.

Bingo! That “heavy government spending firmly entrenched in American society” is precisely the problem! The waste, fraud, and abuse in the federal government that is being uncovered by the Trump administration is also present in the state, city, and county governments and all the several “taxing districts” to which homeowners pay property taxes.

Image by Pixlr AI.

Succinctly stated, every homeowner’s property sits in numerous “taxing districts.” These tax districts include the state, city, county, school district, water district, fire district, sewer district, surface water district, diking district, et cetera.

Each of these districts has a legislative body that annually adopts a budget and levies that budget on the property owners in the district. The levy amount against a specific owner is proportional to the value of that owner’s property. That is, the individual must pay that proportion of the district budget that is his property’s proportion of the total district wealth.

If the owner’s property is X percent of the total district wealth, then the owner’s property tax liability is X percent of the district budget. The owner’s share of the budget is his share of the total wealth of the district.

The county sends out the annual tax bills, which summarize the amount the taxpayer owes to each tax district. If you look at your tax bill, you will see that the largest tax liability is for your local school district.

The main point to grasp here is that the size of the property tax bill is driven by the size of the taxing district budget. Within that framework, most states have some statutory limitation on district budget size, usually either (1) limiting the budget to a specified percent of the entire district value or (2) limiting the annual budget growth to a specified percentage of the previous year’s budget.

These limiting statutes typically allow a taxing district to evade the limitation by means of an election, in which a majority of the voters agree to a “budget override” approving the district’s push to override the statutory budget limitation.

The Epoch Times piece, however, sees another, better way. It says, “some forms of taxation make more sense than others. The fairest and least painful form of taxation is consumption taxes [sic] such as sales and excise taxes.”

Moving from a property tax system to a sales tax system could have enormous consequences. Under the property tax system, the taxing district sets its budget and then levies its budget against the owners in the district. Under a sales tax system, the district must live with whatever the annual sales tax generated. That could have bracing effects on district ambitions.