Improving the Property Tax by Expanding Options for Monthly Payments

For roughly half of U.S. homeowners, the property tax is unlike practically any other bill or tax because it is paid in just one or two large lump sums each year rather than in smaller (monthly) payments. This payment schedule appears to cause several problems for homeowners and local governments; i...

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Bibliographic Details
Published in:Policy File 2018
Main Author: Langley, Adam H
Format: Report
Language:English
Subjects:
Housing
Lincoln Institute of Land Policy
Taxation
Online Access:Request full text
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Summary:For roughly half of U.S. homeowners, the property tax is unlike practically any other bill or tax because it is paid in just one or two large lump sums each year rather than in smaller (monthly) payments. This payment schedule appears to cause several problems for homeowners and local governments; it can create financial challenges for households, increase tax delinquency, foster political opposition to the property tax, and requires governments to deal with irregular revenue inflows. Fortunately, there is a fairly simple solution to this problem: local governments can expand options to pay property taxes on a monthly basis. In the United States, there are two existing models for paying property taxes monthly: 1) prepayment programs that allow taxpayers to apply to pay monthly and have the funds accumulate in an escrow account to pay off their annual or biannual tax bill; and 2) a monthly installment plan in Milwaukee, Wisconsin, where every tax bill includes the option to either pay in full or in monthly installments. This report describes these two approaches for allowing monthly property tax payments and outlines some best practices that can enhance the effectiveness of these programs.