Florida did it more than a decade ago with their melodramatically named "Save Our Homes" property tax cap. It took a while, but people are figuring out that they've been taken for a ride. Check out a great editorial from the St. Petersburg Times here.
"Save Our Homes" is an assessment cap, which means it limits the amount by which a home's taxable value can grow each year. Florida's cap is 3 percent or the rate of inflation, whichever is lower. So if your home's market value increases each year faster than inflation (a pretty good bet for Floridians living in most coastal areas), a gap is created between what your home is really worth and what it's worth for tax purposes. And that gap gets a little bit bigger every year. Of course, newly built homes get no immediate benefit. And when homes are sold, the taxable value resets to equal the market value.
This leads to the sort of inequity that is now being routinely cited in Florida papers, where two neighbors' homes are worth the same amount but they pay very different amounts of property tax.
One unintended consequence of this inequity is that when you sell your house and buy another one in Florida, you lose your tax break. Losing a poorly targeted tax break is maybe not the worst thing in the world, but some Florida lawmakers are very, very worried about this.
One boneheaded, but entertaining, solution being bandied about right now would let people take their accumulated tax cap benefits with them when they sell their home and buy another one in Florida. So if you've lived in your home for 30 years, and its market value is $500,000 but the tax code says it's worth $300,000, your tax benefit from the cap is $200,000. When you buy a new home, whatever it's worth and however rich you are, you get to subtract that $200,000 from the market value of the home.
The Times editorial board, to its credit, recognizes that this is more of the same shell game:
The elderly widow is being invoked again, this time because she is supposedly trapped in her home for fear of higher property taxes even if she moves to a smaller home. Yet the tax break is being offered, again, without regard to ability to pay. So wealthy widows, or wealthy homeowners, would reap the benefit...If lawmakers truly were concerned about elderly widows on fixed incomes, they would fashion a constitutional amendment targeted only at them.Let's hope state lawmakers can be this level-headed in an election year.