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How do jurisdictions that cut or remove property tax fund public education and infrastructure afterwards?
Executive summary
Jurisdictions that cut or remove property taxes typically replace the lost revenue by raising other taxes (most commonly broader sales or income taxes), shifting responsibility upward to state governments, or sharply trimming services — because property taxes currently fund the bulk of local services like schools and public safety (examples cite $43 billion at stake in Florida and warnings that wiping out $23.9 billion in Ohio would be “irresponsible”) [1] [2]. Policy analysts and state commentators warn replacement options are politically difficult, regressive, or economically unstable and that any abolition debate must grapple with how to replace roughly 70% of local tax receipts that property levies supply [3] [4].
1. The hard math: property tax revenue is huge and local-budget critical
Property taxes are the single largest source of state and local revenue in the United States and undergird schools, roads, police, and other services; abolishing them would create large fiscal gaps that must be closed [5] [3]. Florida analysts calculated eliminating property taxes would require replacing roughly $43 billion annually — roughly $2,015 per capita in that state — which illustrates why lawmakers call abolition “harsh fiscal realities” [1] [6]. In Ohio critics similarly warned you “can’t just wipe out $23.9 billion without a plan to replace it” [2].
2. The go-to replacement: broadened consumption taxes (sales taxes)
A common blueprint for replacing property levies is to expand consumption taxes — higher state sales taxes or broader tax bases — because they are politically simple to administer and can be collected statewide. Governing and other analysts note many proposals combine broader sales taxes with other measures as the easiest way to chase the revenue numbers, though rates must be high and the base will fluctuate with the economy [4] [7]. Critics stress that such swaps are regressive: lower‑income households spend a larger share of income on consumption, and sales revenues are more volatile in downturns than property collections [4] [6].
3. State takeover or centralization: shifting costs from local to state government
Another frequent approach is state-level replacement: the state assumes school and local service funding previously paid by local property taxes. That preserves services but reduces local fiscal autonomy and can create perverse incentives — localities lose pressure to economize and must compete with statewide priorities for limited dollars [7] [8]. Analysts point to California’s post-Prop 13 evolution, where caps on local taxation led to greater state control and repeated fights over school finance as a cautionary tale [7].
4. Partial reforms: caps, assessment limits, split-rate or land-value taxes
Some jurisdictions stop short of abolition and instead adopt caps, homestead exemptions, assessment limits, or split-rate/land-value approaches to reduce burdens while retaining revenues. Florida’s long history of assessment caps and homestead exemptions shows how reformers try to blunt increases without eliminating the tax entirely [1] [7]. Those measures can buy political space but often produce long-term distortions and unequal burdens unless carefully designed [5].
5. The fiscal tradeoffs: service cuts, credit risk, and volatility
Where replacement revenues are insufficient or delayed, local governments face service cuts — from education to emergency services — or increased borrowing that can harm credit ratings. Commentators emphasize that sales-tax-heavy models are more cyclical, making school and infrastructure funding vulnerable in recessions [6] [3]. The Tax Foundation and other analysts caution many replacement options “do more economic harm than the tax they replace” unless policymakers fully account for long-term effects [9] [3].
6. Politics and distribution: who wins and who pays
Proponents frame abolition as homeowner relief; opponents warn the burden shifts to broader populations and often hits lower-income residents harder through consumption taxes. Some abolition campaigns combine property repeal with protections (like supermajority requirements to raise other taxes), underlining a political strategy to lock in low local taxation even if it narrows future policy options [4]. Analysts from tax policy outfits stress that any realistic replacement will redistribute tax incidence and requires transparent debate about who bears the cost [8] [3].
7. Bottom line and reporting limits
The reporting sampled here shows a consistent consensus: eliminating property tax is feasible only if policymakers identify large, durable replacement revenues or accept painful spending cuts; common replacements are broader sales taxes, state takeover of funding, or targeted tax redesigns, each with tradeoffs [4] [3] [7]. Available sources do not mention specific jurisdiction-by-jurisdiction case studies where full abolition occurred and services were maintained without either higher statewide taxes or spending reductions — most examples are reform blueprints, warnings, and fiscal estimates rather than completed long-term experiments [1] [5].