Common Ground Oregon-Washington 2017 Oregon Legislative Agenda
PROPERTY TAX BURDEN IS UNEQUAL
“Oregon’s [tax-limitation] system has created great inequities, concentrating benefits in gentrifying neighborhoods that have seen fast-rising home values. Other parts of the [Portland] metro area have seen their relative tax burdens increase. ‘We’re pricing people out,’ said Arlene Kimura, east Portland neighborhood activist.” [Oregonian, Sep. 11, 2015]
HOME VALUES DEPEND ON AN UNEVEN SYSTEM
“From a policy perspective, basing property taxes today on mid-1990s market values is arbitrary and unfair. As a result, the property tax system is disproportionately benefitting property owners who can afford to buy in areas with faster increases in property values and creates a hidden subsidy for these same owners. Though our report focused on Portland, we would expect to find these results in other Oregon cities…” [The Oregonian, Mar. 21, 2014]
SIMILAR PROPERTIES, UNEQUAL TAXES
“…ever since Bill Sizemore’s ‘cut and cap’ tax limitation…Multnomah County homeowners with similarly valued homes now pay wildly different property taxes. ‘The system is completely irrational. I can hardly believe that it’s legal’.” [Portland Tribune, Jan. 10, 2013]
IT’S TIME TO REASSESS OREGON’S BROKEN PROPERTY TAX SYSTEM
“Oregonians across the political spectrum can likely agree that our property tax system is in need of reform… reforms that create greater equity by empowering voters to pass local option levies…resetting assessed value to market value…” [Mike McCauley, League of Oregon Cities]
PROPERTY TAX PROS AND CONS
“The underfunding of public services that is the result of our crazy and unfair tax system reduces the quality of life for our children and us, and harms the economy. It is way past time to fix our broken system.” [Letter to the Editor, The Oregonian, Mar. 26, 2014]
After more than 20 years’ experience with Oregon’s constitutionally-imposed property tax limitations, it is evident that the tax system has become increasingly unfair and economically unproductive. The cumulative effects of limiting the growth of property assessments under Measure 50 are both (i) continuous revenue shortfalls, and (ii) a gradual shift in burden onto lower value residential sites. Economists have spoken out against both the use of limited assessments as a tax restraint and the perverse manner in which taxing building values discourages capital investment and the efficient use of land.
At the request of Common Ground OR-WA, Legislative Counsel prepared this bill for the 2017 session:
SB756 This study bill directs the Legislative Revenue Officer to study land value taxation, a property tax system that imposes higher uniform rate of tax on land assessments than on improvement assessments.
The study of land value taxation is to include:
- An examination of the tax burden effects of a change from the current system of property taxation under Measures 5 and 50 to land value taxation.
- Simulation model comparisons of tax applications using true market assessments and a revenue neutral framework.
- An examination of comparative economic incentive effects on classes of land use in selected local urban and rural jurisdictions.
- An assessment of comparative revenue-generating effects on multiple taxing districts within a local jurisdiction.
- An examination of an alternative method to a split-rate land value tax that would exempt a specified proportion of the median assessment of all improvements within a jurisdiction, under a single-rate tax regimen.
- An evaluation of tax burden relief measures that might accompany land value taxation, including a homestead exemption and a property tax deferral for homeowners who are financially overburdened.
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Our goal is a comprehensive reform of Oregon’s property tax system. We envision a local option land value tax that exempts participating counties and cities from M5 and M50 limitations, returning to the standard practice of basing the tax rate on true market value assessments, and lowering the tax rate on improvements while raising the tax rate on land.
Common Ground OR-WA is a chapter of Common Ground USA, organized for the purpose of seeking social justice and economic equity for all legal residents of Oregon and Washington. We promote residents’ equal and common rights in the earth and its resources by reducing taxes on labor and capital, and using the value of land and other natural resources to pay for essential governmental services.
