An excerpt is below, and the rest of Chapter 1 is here. Light reading for the holidays.
Local governments across the United States are struggling to raise revenue to pay for public services. Increased demands by citizens for more, and better, public services; the ever-rising costs of providing services; and a plethora of legal and political restrictions on raising tax revenue have left many American local governments in dire fiscal straits. These revenue problems are not the result of economic downturn. Rather, the problems stem from structural deficiencies that pose a risk to raising revenue and meeting government service responsibilities far into the future...
The existence of local government that Americans are familiar with will be in jeopardy without a significant change in the way local government is financed.
Without reform to ensure stable tax revenue, local governments could be weakened to the point of irrelevance. That stable tax revenue must be within the political and legal control of local government institutions. Without such a revenue source, local governments will be incapable of efficiently and effectively providing services. More important, local governments will continue to cede financial and political control to the states.
The only revenue source capable of ensuring a strong and vibrant local government is the property tax. This assertion is intentionally provocative because a failure to address the problems associated with local government finance will have serious consequences. Essentially, without significant financial reforms, local governments will play a far-diminished role in public life—a consequence that is contrary to the best interests of both the American federal system and the American public.
This book expands on this belief by using basic, widely accepted theories, none of them particularly controversial, or even novel. Essentially, from both an economic and political perspective, local governments are a normative good. But local governments require a certain amount of autonomy over their fiscal affairs to carry out their responsibilities. The property tax is the only source of revenue that provides that autonomy. Unfortunately, public and political pressure have eroded the tax’s vitality for decades, and the tax no longer dominates local government finance. The problem for American cities, towns, and counties is that there are no viable alternatives to taxing property, at least none that can ensure fiscal and political autonomy. Thus, the property tax must be strengthened and revitalized if local governments are to continue to play an important role in American society.