Many homeowners express a seemingly contradictory wish: they want the market value of their property to increase because it builds wealth, yet they also want to pay lower property taxes on that same asset. This tension was highlighted in a recent paper by David Schleicher titled “The Great American Property Tax Freak Out,” posted to SSRN on September 1, 2026.
Schleicher observes that over the past three years a number of states have substantially reformed their property tax systems. These reforms provide large tax benefits to owner‑occupied homes while shifting the financial responsibility for local services—such as schools and police—to commercial property owners (including rental apartment buildings), other local taxes, and state funding sources like sales and income taxes. In several states, including Florida, Ohio, North Dakota, and Texas, policymakers have gone further, debating the complete elimination of property taxes for owner‑occupied housing or even the abolition of property taxation altogether.
Because property taxes function as a form of wealth tax, rising home values increase owners’ wealth without necessarily generating immediate income to cover a higher tax bill. This dynamic has made older voters, who often hold substantial home equity but have lower current income, a politically powerful and sympathetic group pushing for tax reductions or eliminations. Schleicher notes that when property taxes are lowered or removed, the cost of owning a home falls. Lower ownership costs, in turn, tend to push up the market value of homes.
This creates an ironic feedback loop: higher housing prices motivate voters to seek limits or repeals of property taxes, which would then reduce ownership costs further and drive prices even higher. Current homeowners who have already benefited from post‑COVID appreciation stand to gain additional wealth, while prospective buyers face an even steeper entry barrier.
Beyond the fiscal mechanics, the reforms shift the role of property tax from a tool that homeowners collectively use to finance locally desired services to a more standard redistributive model where commercial owners pay for services that primarily benefit residents. Schleicher argues that this change leads to greater state authority over local governments, less stable funding for localities (though it reduces tax foreclosure during recessions), stricter zoning controls, and potentially more new construction where zoning permits. Most notably, the author concludes that the reforms will likely raise overall housing costs, effecting a transfer of wealth toward those who already own homes and have seen their net worth rise in the recent housing market.
All of these points are drawn directly from Schleicher’s analysis and the accompanying facts about local revenue reliance, the wealth‑tax nature of property taxes, and the political influence of older, wealth‑rich voters.