By now, everyone has an opinion on the battered American economy:  why it happened, who caused it, and what we should (or shouldn’t) do about it.  There’s one issue that almost all of us agree on though…no one wants to pay higher taxes, whether it’s to bail out the latest corporate behemoth-turned-beggar, or the city and state governments who continually complain about budget shortfalls. 

Therein lays the problem: we are continuing to pay increasingly higher taxes, even as federal and state budgets wallow in debt.  The common belief is that there’s little (if anything) the average taxpaying citizen can do about this.  “We can vote the bums out of office!” you might say.  Of course, that’s theoretically true, although most of us reading this have seen both government budgets and our taxes increase, regardless of which party is in power.

With all of the attention on the latest stimulus package beginning to overshadow the headlines about the housing crisis, I decided to take a closer look at where the government is collecting its taxes, and whether the recession has had any impact.  In short, the answer is a resounding “NO!” according to the U.S. Government’s own figures, available on the U.S. Census Bureau website.  In fact, looking at the revenues collected by state governments, taxes are up a whopping 32% over the period covering 2004 to 2008.

In the short term, it’s easy (and convenient) to believe there really isn’t much we can do about this, aside from cutting down on our trips to the mall or moving our families to some offshore tax haven.  The truth, however, is that there is a relatively easy and legal way to reduce our tax burden, and it’s already written into our local tax laws.  What I’m referring to is our home’s assessed value - that is, the value that the government says our property is worth.  This is the value on which our property taxes are based.  With home prices dropping dramatically across the country, one might think that our local tax assessor would take this into consideration, and then, like magic, we’ll payer fewer taxes this summer.  Technically, this should be the case, but far too often, it’s not.  Even in the event our taxes are reduced, it’s usually a case of “too little…too late”.  

Let’s turn back again to the Census website, and look at state property tax collections through 2008.  After real estate prices began decreasing rapidly in 2006, you might expect to see a corresponding decrease in the amount of property tax revenues collected. Again, you would be wrong, as tax collections actually increased 3.4% over this period. “But it’s all about the location, right?” you’re probably thinking.  Well, yes, and that’s my point, and why you should make every effort to determine if your home is being properly valued.  By now, you probably think you might be paying too much in property taxes, and in fact, most of us are.

Let’s use Nevada as an example.  In a state where average property values have fallen more dramatically than John Edwards’ political career, property tax revenues are actually up 14.8% since 2006, and those increases are fairly typical among many states. To be fair, there are a few states that have responded more fairly than others, with Ohio and Rhode Island leading the way.  For the most part, however, the numbers tell a story of government bureaucrats over-assessing the values in their states.  To be sure, of the states that report property tax collection data to the federal government, all but twelve of them have increasing property tax revenues.  Of the other states, the lower tax revenues still aren’t inline with the realities of today’s real estate market.  

Bottom line: If you are worried about opening your next tax bill and being surprised by how much you’re asked to pay in property taxes, don’t just blame the government.  You have a right to appeal your tax assessment, and it may just save you hundreds or thousands of dollars every year.  

To see how your state compares, and learn more about your local property tax rates and the appeal process, visit lowtaxrate.com.