Analysis Offers Model for Meaningful Reform

Washington, D.C. – Today, Americans for Tax Reform, the nation’s leading taxpayer advocacy
organization, released a paper which points to spending as the reason for sky-high property tax
bills. The paper, which includes a case study of Massachusetts and New Jersey, offers a model to
address the question facing lawmakers across the country; what do we do about ever-growing
property taxes?! The paper may be accessed on ATR’s website:
http://www.atr.org/content/pdf/2006/jan/012606ot-property_study.pdf.

While states often resort to increasing sales and income taxes to fund property tax “relief,” the
ATR analysis points to Massachusetts’ Proposition 2 1/2 as a model of reform. Proposition 2 1/2,
enacted during the “property tax revolution” of the 1980s, addresses the source of high property
tax rates by limiting local spending increases to 2 1/2 percent, unless voters agree to an override on the ballot.

“Too often, tax-and-spenders try to lower property taxes by tossing more money to the
bloating local governments,”
said taxpayer advocate Grover Norquist, president of Americans
for Tax Reform. “However, instead of leaving the taxpayers alone, big spenders blow
through the state money and come knocking on residents’ doors for even more.

While Massachusetts has seen lower property taxes and more local accountability for spending decisions, New Jersey has seen increases in property taxes as well as in the income tax passed to provide property tax relief. In fact, since Proposition 2 1/2 was enacted in Massachusetts, property taxes have increased 36% slower than the national average and 64% slower than property taxes in New Jersey.

“As experience in Massachusetts demonstrates, property tax reform must address the root
problem- out of control local spending,”
continued Norquist. “Rather than shuffling
taxpayers’ dollars around and leaving the back door open for big spenders to sneak in more
tax hikes, lawmakers should make sure that any ‘reform’ includes taxpayer protections.”