Statement of Principles on Truth in Property Taxation

Summary

Property taxes should not expand simply as a result of inflationary increases in property values. The proper function of taxation is to raise money for core functions of government, not to close budget gaps created by overspending. If a taxing entity desires more revenue from its property base, taxpayers should be given public notice and legislators should be required to hold public hearings and votes to ensure accountability and fiscal stewardship. Utah’s Truth in Taxation law provides an excellent example of this.

Statement of Principles on Truth in Property Taxation

Statement of Principles on Truth in Property Taxation

Guiding Principles: Utah’s Example

Utah enacted its Truth in Taxation law in 1985 to provide a solution to taxpayer unrest from ever-increasing property taxes.

  • Accountability – While Utah’s law does not limit property taxes, it makes local elected officials think twice about increasing property tax rates. Citizens will be notified of any increase and its potential impact on their property.  Lawmakers are also required to hold a broadly advertised public hearing about the proposed tax hike.
  • Reliability – Truth in Taxation is a revenue-driven system, not a rate-driven system. Generally, as valuations of existing property increase from county assessors’ annual adjustments of taxable property values to keep pace with market values, property tax rates decrease. This automatic reduction in property tax rates prevents local governments from getting a windfall simply because valuations of existing properties have increased.
  • Competitiveness – When the law passed in 1985, Utah ranked 24th in the nation in property taxes per $1,000 of personal income. Utah now ranks 36th. Even still, over the last three decades property tax revenues to the State of Utah have grown faster than inflation and population growth combined.