Florida’s property-tax revolt could come with a steep price
The United States is in the throes of the largest tax revolt in a generation, and the revolutionaries are winning.
Since 2020, nationwide home values have climbed roughly 50 percent, leading property-tax bills to increase 19 percent and contributing to a 71 percent increase in the cost of homeowner’s insurance. At the same time, the price of gas, utilities, food, and everything else has risen, stamping out entrepreneurship, dimming the fertility rate, and making even six-figure earners feel financially strained.
Homeowners have had enough, and grassroots groups have mobilized to turn private kvetching into public policy. Over the past four years, nearly two dozen states have slashed property taxes: Alabama by capping annual assessment increases, Colorado by lowering marginal rates, Indiana by creating credits, Nebraska by setting a limit on local collections, New York by sending checks to homeowners, Wyoming by carving out loopholes for seniors. My back-of-the-envelope accounting suggests that the measures have reduced property-tax revenue in those states by 7 percent, saving homeowners as much as $45 billion a year.
This November, voters will consider a spate of similar proposals, the most radical one coming from legislators in Tallahassee, Florida. Amendment 3, popularly known as “Save Our Homes,” would raise the “homestead” exemption on owner-occupied properties in the state from $50,000 to $250,000, meaning a couple with a condo with an assessed value of $400,000 would pay their county’s property-tax rate on $150,000 of their home’s value, rather than on $350,000. The amendment would eliminate levies on more than half of dwellings. In time, Florida legislators want to phase out property taxes on owner-occupied homes entirely.
Amendment 3 would give property owners a giant tax cut: $12 billion a year by one estimate. It would ease the local cost-of-living crisis too, its proponents argue. “Affordability is a problem for all Floridians,” Byron Donalds, a Republican congressman and the front-runner in the governor’s race, said on the stump last month. “It doesn’t matter what your politics are. It doesn’t matter what the color of your skin is. Because when taxes and insurance are more than principal and interest, you got a problem.”
Yet what is being framed as a populist fight for affordability is in reality a form of class and generational warfare. Property-tax relief gives to the rich and takes from the poor. It aids seniors and harms children. It puts homeownership even further out of reach for many Americans, and it makes daily life even more expensive for low-income Americans.
To be fair to the amendment’s supporters, these arguments are not exactly intuitive. The annual cost of owning a home has climbed precipitously. Millions of working-class and middle-income families own their home. If you cut property taxes, you reduce their costs. This much is true.
Yet homeowners’ insurance and property taxes don’t function on a family’s balance sheet in the same way that rent, groceries, gas, cars, child care, and airfare do. Their cost goes up when familial wealth goes up. In Florida, real-estate appraisals have increased 83 percent since 2019, according to the state’s revenue department, suggesting that homeowners’ net worth has increased by trillions of dollars. Does public policy really need to solve the problem of rising taxes due to rising valuations? Is it even a problem at all?
If retirees on fixed incomes can’t afford their insurance payments and families can’t figure out how to cover their tax bill, maybe. Yet the number of Florida homes and buildings that are delinquent on their property taxes has fallen slightly since 2020. The number of foreclosures has increased a bit, but remains low. The state’s housing market is fraying and distressed sales are increasing, but that’s because of climate change and mortgage rates, not tax assessments. Floridians may not like paying a higher tax bill, and carrying costs might be spurring some of them to downsize. But in general, property taxes are levied on people who can afford them. The typical homeowner earns twice as much as the typical renter, and has 43 times the net worth.
But municipalities aren’t expected to make up all of the lost revenue. They’re expected to cut. Amendment 3 explicitly protects tax-financing streams for schools, meaning that cities and counties are contemplating draconian budget reductions for public-safety offices, libraries, after-school programs, summer camp, day care, flood prevention, public transit, roads, parks, senior services, homeless shelters, legal-aid clinics, domestic-violence shelters, and many other things. Austerity will be regressive too, harming the poor more than the wealthy. Rich Floridians aren’t relying on the bus to get to work. They’re not picking up free meals, taking adult-literacy classes at the library, or seeing a dentist at a pop-up clinic in a middle-school gymnasium either.
In the worst-case scenario, State Senator Tina Polsky told me, cities and counties “wouldn’t have enough money to keep going, even to pay their elected officials.” They would need to merge, or “come begging in Tallahassee, and those with the best lobbyists and the best connections are going to get the money.”
Add the possibility of a recession to that worst case. In a downturn, Florida would have no revenue from individual income taxes. (Florida voters banned them in a 1924 constitutional amendment.) It would have less income from property taxes than it did before. Yields from sales, corporate, and tourist taxes would fall. The state’s revenue base would collapse, meaning cuts to public services and layoffs and a secondary decline in consumer spending, leading the revenue base to shrink even more.