Property Tax Revenue Grows Nearly Four Percent

NAHB analysis of the Census Bureau’s quarterly tax data shows that $519 billion in taxes were paid by property owners over the four quarters ending in Q3 2015. This represents a $19 billion—or 3.9%—increase over the previous trailing four quarters, the largest annual increase since early 2010.

Property taxes accounted for 39.1% the largest share, of state and local tax receipts among major sources over the past four quarters, followed by individual income taxes (28.8%), sales taxes (27.8%), and corporate taxes (4.4%).

property tax pie chart

Gains for state and local non-property tax collections have outpaced increases in property tax receipts in recent years as the underlying sources of tax revenue—most notably, income—have continued to rebound from recession lows.  As the growth of the more-volatile non-property tax receipts has accelerated, the ratio of property tax revenue to total tax revenue from the four aforementioned sources has fallen from a high of 44.9% to 39.1% in roughly six years.  While down nearly five percentage points since 2010, the current share is still higher than the pre-housing boom average of 37%.

The share of property tax receipts among the four major tax revenue sources naturally changes with fluctuations in non-property tax collections. Non-property tax receipts including individual income, corporate income, and sales tax revenues, by nature, are much more sensitive to fluctuations in the business cycle and the accompanying changes in consumer spending (affecting sales tax revenues) and job availability (affecting aggregate income).  In contrast, property tax collections have proven relatively stable, reflecting not only the smoothing effects of lagging assessments and annual adjustments, but also of the long-run stability of tangible property values.

property tax line graph


Data footnote: Census data for property tax collections include taxes paid for all real estate assets (as well as personal property), including owner-occupied homes, rental housing, commercial real estate, and agriculture. Owner-occupied and rental housing units combine to make housing’s share the largest among these subgroups.

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