Tennessee’s Most Abusive Tax Goes Unchecked
It Is Time Tennessee Reforms Its Feudal Property Tax System If It Wants To Continue To Be Billed As A Destination State For Business And Retirement. If We Don’t Reduce The Tax Burden For Our Seniors They Will Relocate Elsewhere. If We Fail To Adopt “Truth-In-Taxation Revenue-Driven Property Taxation” Like Other Growth States, Our Residents And Businesses Will Move To More Property Tax Friendly States.
Photo Credit: Marco Verch / CC
Published August 10, 2021
Exclusive Editorial for The Tennessee Conservative
By William Haupt III [Tennessee Watchdog Journalist, Columnist, Author, and Citizen Legislator] –
“America is a land of abusive taxation that was founded to avoid taxation.” —Gordon Peters
In 1999 when Governor Don Sundquist proposed a state income tax it ignited a protest just short of a civil uprising! Tennessee Tax Revolt, an anti-tax group led by activist Ben Cunningham helped organize nonstop demonstrations around the state. Steve Gill and Phil Valentine broadcasted from the Capitol steps. Caravans of dissidents circled the capitol 24/7 honking horns brandishing signs.
Losing Republicans support, Sundquist allied with the liberal left and this was his Waterloo. When public opinion prevailed, determined to raise taxes, he increased sales taxes to 9.75%, the highest in the nation. These petulant protesters were so incensed over this they lobbied to amend the state Constitution and outlawed the state income tax in 2014 forever. It easily passed 66.21% to 33.79%.
Since the advent of Obama-flation when Fed Chairperson Janet Yellen dumped worthless dollars into the housing market to float the Obama economy, millions of Americans have been priced out of the home market. The only one benefiting is the tax collector. Logic dictates that anyone so adamantly opposed to a state income tax would be circling the assessor’s office honking horns and carrying signs crying foul! Yet there is seldom a whimper about the most unfair tax that they pay each year?
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In 1978, California property taxes had increased so drastically people were trading their homes for apartments, trailer parks and rooming houses. A small group of Davids confronted the invincible tax dragon and passed a citizen initiative, Prop 13 that fueled a tax revolt heard around the nation.
Prop 13 reduced property taxes to 1% of purchase price and put a 2% cap on all tax increases. All new taxes or increases in every tax had to be approved by a two thirds majority vote. Prop 13 put citizens in charge of state spending. Although progressives have been legislating away at Prop 13 protections for years, Prop 13 property taxes remain a sacred cow in the nation’s most liberal state.
When Wilson County residents received their tax reassessments in 2018 they were more than 35% above market value! It brought back memories for one left coast refugee and tax mercenary who labored in the trenches of Prop 13’s historic tax revolt. As he saw the County Assessor insult and demean homeowners that appealed their assessments, he set out to reform the property tax code.
He beseeched media, talk radio, and news networks with interviews and op-eds concerning this new unfair State Comptroller tax formula used for assessments. He authored property tax reform legislation for Senator Mae Beavers and House Rep Mark Pody that no one supported? The only remnant of this one man’s property tax revolt is a seldom visited, neglected, page on social media.
For a state with a history of protesting taxes; as property taxes continue to mushroom due to Fed-financed Biden-flation, politicians and homeowners are as silent as church mice. Yet not only are assessments inflated, they are unconstitutional. Where are the Volunteer State anti-tax-hounds?
Tenn. Code. § 67-5-601 states “all property shall be ascertained from the evidence of its sound, intrinsic and immediate value, for purposes of sale between a willing seller and a willing buyer without consideration of speculative values. No appraisal shall be influenced by inflated values.”
The property tax dates back to the middle ages when the lords of the manor had to pay taxes to the Kings or they would lose their land. This feudal system has not changed. Property owners are still held hostage by Tennessee municipal Kings to pay for buying a place to live. Few homeowners have an understanding of how much of the county or city infrastructure, schools and public servant salaries that they alone are paying for. If they did, they would squeal like pigs in a bacon factory!
According to Tax Watch, property taxes collected by local governments in 2020, rose the highest in recorded history. Some homes increased in assessed value by over 28%. Tennessee is in the high end of the national average and they predict prices will rise as much as 15% before the end of this year. Anyone who has seen their recent property tax bill has got to wonder what are Tennessee counties doing with this windfall of cold cash? And why aren’t our state legislators addressing this?
States around the nation are keeping an eye on property taxes with an election coming up. Many are lowering mileage rates since homeowners can’t pay these Biden-flation taxes. By reducing tax rates, they collect the same revenue, and “Homeowners don’t pay more than their fair share. And government gets ‘only’ their fair share.” We’ve heard nary a word about reducing our taxes here?
Many states access and reassess property yearly due to the Inflation Index and when the housing market is artificially inflated. They use a simple formula. Truth-in-Taxation (TNT) is revenue-driven, not a rate-driven system. As valuations of existing property increase, property tax rates decrease. This automatic reduction in tax rates prevents local governments from gouging the homeowners.
This is not so in Tennessee. Certified tax rates are only adjusted if a county-wide reappraisal takes place every five years. By law, counties and cities must review tax rates after reappraisals to ensure higher values don’t increase revenue. Known as “truth-in-taxation”, local commissions invite public hearings to adopt a property tax rate that doesn’t increase taxes—-but only in a reappraisal year!
The definition of a “county-wide reappraisal” is ambiguous at best! Most all homeowner’s tax bills in every municipality is “reassessed” yearly. Yet the tax rate does not go down like in the “Truth-in-Taxation (TNT) revenue-driven systems” used by many states. Why don’t these yearly reappraisals that result in raising tax revenue “without voter approval” trigger the same reduction in the tax rate?
The property tax is the primary source of revenue for local governments to finance schools, roads, parks, fire, police and other services for “everyone” not just homeowners. It generates about three-quarters of local taxes and over half of local government revenue excluding state and federal aid.
Over 50% of the property tax bill in Tennessee is gifted blindly to unaccountable school systems.
This is a wealth tax that only homeowners pay and renters get a free ride. All states give some type of a property tax break to seniors. They don’t pay any in Mississippi. But in Tennessee, it is county optional and you must live in a trailer in a cow pasture on food stamps to qualify for a tax freeze?
People can’t predict what their taxes will ever be. The local tax lords punish homeowners when markets go up and never lower taxes when they go down. Homeowners can’t control taxes since they alone finance all new growth and schools! Progressives inflate prices by pumping money into housing markets to keep interest rates low which inflates all home prices. This affects homeowners more than buyers. Those on fixed incomes, especially seniors are forced to sell their homes. And many of our greatest American heroes are cast aside and sent to apartments and assisted living.
Low-income households with large families consume more services such as education and county assistance, than they pay for. Many get EBT cards, SNAP, WIC, and section eight housing. These “free-riders” don’t pay property taxes. But seniors, who have no school age off-spring, unfairly pay school taxes until the day they die? Seniors are the most maltreated homeowners in Tennessee!
Two years ago Beacon Center, our state legal think tank, introduced legislation to amend the state tax code. Their “novel” idea was to simply give the “homeowner” the privilege of voting on any tax increase that was over 2%? The bill failed to generate even a whimper from our anti-tax activists?
According to Business Daily, over the last five years, the Tennessee Department of Economic and Community Development has brought 19,000 jobs and $2.1 billion in capital to Nashville. Housing markets are on fire, so prices have skyrocketed. Even with this major influx of new revenue, John Cooper, Nashville’s progressive mayor believes he has a leftist mandate to expand government? So he strong-armed a business-killing 34% property tax hike though Metro government last year!
It is time Tennessee reforms its feudal property tax system if it wants to continue to be billed as a destination state for business and retirement. If we don’t reduce the tax burden for our seniors they will relocate elsewhere. If we fail to adopt “Truth-in-Taxation revenue-driven property taxation” like other growth states, our residents and businesses will move to more property tax friendly states.
Milton Freeman’s economic theory of “revenue volume” produced by lower tax rates is not rocket science. Higher tax rates discourage growth and this results in fewer dwellings to tax which makes for less revenue. This is the typical anti-capitalist, anti-business progressive plan to over-tax those that produce and redistribute wealth to losers to make everyone equal in a progressive Shangri la.
Howard Jarvis of Prop 13’s tax revolt remarked, “Property taxes are the most unfair tax. They are a wealth tax that punishes people paying for one of life’s basic necessities; a roof over their heads. Property owners finance schools, police, fire and most all other county services for everyone else.
Only a fool would continue to pay these totally unfair taxes every year without protesting them!”
“Who are ever taxed? Individuals only. Who have property that can be taxed? Individuals only. Who can give their consent to be taxed? Individuals only. Who are taxed without their consent? Individuals only. Who, then, are robbed, if taxed without their consent?”— Lysander Spooner
About the Author:
William Haupt III is a retired professional journalist, author, and citizen legislator in California for over 40 years. He got his start working to approve California Proposition 13. His work also appears in The Center Square, The Western Journal, Neighbor Newspapers, KPXJ 21 (Shreveport, LA), Killeen Daily Herald, Aberdeen American News, InsideNova, Kankakee Daily Journal, Monterey County Weekly, Olean Times Herald, The Greeneville Sun and more. Follow William on Twitter @iii_haupt.
Nobody likes taxes. Having said that, I think Tennessee is one of the most fiscally well-run states in the country; certainly the best I have lived in, including Alabama, Arkansas, Texas and California. Our roads are well-maintained, along with our parks and recreation areas, we have good schools; I really don’t see the gripe. As far as the sales tax goes, we don’t have state income tax, so I think this sort of consumption tax works well.
And what do you propose as an alternative? An income tax? A use tax? How do you propose the state and cities and communities raise revenue for basic needs such as public schools, fire departments, police and sheriff departments, etc.? I’m not arguing your proposition just asking for your proposed alternative making the assumption that state and municipal revenues need to be raised and that all that benefit from our community and way of life should contribute to that cause.
Having lived many years in a state without either a sales or an income tax, I can speak to the question.
Property taxes are necessary for the operation of municipal systems (fire, police departments, roads and schools ), but when they are too high, yes, it is true that people move out. Renters do pay some of that burden when they pay their monthly rents, but the bulk of the price falls on the home owners. What would I propose as an alternative? Make the Property tax fair. All property that is not an actual place of worship or the residence of the leader of that group, should be taxed. And if the leader of the group (I’m thinking of those who get mail-order ordinations) cannot produce a legitimate piece of paper, he/she is taxed at the going rate. Seniors should get a homestead exemption, but not if they are multi-millionaires ( use IRS 1040 info for this); Farmland should be taxed on its current use, not projected ( read: subdivision ) use. Opposition? Of course. Easy? Of course not. But necessary to the continued growth of your state.
Nobody is advocating replacing property taxes. This article is about assessments not abolition. According to article Tenn. Code. § 67-5-601 of TN Code Annotated, assessments and reassessments must be done according to our tax code which states, “All property shall be ascertained from the evidence of its sound, intrinsic and immediate value, for purposes of sale between a willing seller and a willing buyer and no appraisal shall be influenced by inflated values.” Anyone who has been through the appeals process understands what a challenge it is to correct an unfair assessment. Ten houses exactly alike in the same subdivision can carry entirely different assessments. I had to appeal all of the way to Chancery Court before a judge would concede that the Comptroller’s new formula for taxation is “arbitrary” and does not conform with the tax code that stipulates “like dwellings in comparable neighborhoods are the criteria that is used to influence on assessments. We have as many homes that are under assessed as we do those that are over assessed. Truth-in-Taxation is a revenue-driven system, not a rate-driven system used by most states that guarantees all homes are assessed fairly and properly to insure that everyone is paying exactly what they should pay and nothing more or less. This article references the “certified tax rate” which by law must be adjusted each time a county reassess the entire county to maintain it’s constant revenue without increasing taxes. All tax increases must be voted on. By increasing assessments yearly, this is increasing revenue, and there is no adjustment in the certified tax rate and no vote but taxes increase? It is true that the senior tax freeze in this state is antiquated compared to other non-income tax states: Public Chapter No. 581, Tennessee Code Annotated, Title 67, Chapter 5, Part 7. Only a minuscule number of seniors qualify for it, since the requirements have not been updated since the state Constitution was amended to enact it in November 2006. This article is about fair and adequate assessments to maintain growth and at the same time protect long term residents from being taxed out of their homes nothing more. This is explained in detail by Dr. Art Laffer in his book “Wealth of States”.