Utah Takes Lead in Movement To Abolish All Property Taxes

Perhaps it was inevitable.

In a time of bounty and unparalleled tax cuts, it should not be surprising that one state might take the ultimate step and suggest doing away with property taxes entirely. But now that Utah is considering it, many are worried about the precedent such a move would set.

Rooted in the Rocky Mountain West's phenomenal growth and the rapidly escalating property values that have accompanied it, the move taps Utahns' profound connection to the land and the desire to keep anyone from interfering with their rights. If passed, it could significantly impact schools - which depend largely on property taxes for their money, and businesses - which would bear most of the load. And while any such cut is a way away, other states are already looking to see how the battle unfolds.

To many in Utah, though, the issue of private property is foremost. "Your home is your castle, it's the last vestige of private ownership," says House Speaker Mel Brown (R), a schoolteacher-turned-dairy farmer.

But the cost of holding on to that castle has become too much for some Utahns to bear. Since most of the land in Utah is owned by the federal government, the legions of newcomers to Utah have been wedged into a small strip of land in the north called the Wasatch Front, driving up property values.

State Sen. Robert Montgomery (R), leader of the tax-cut movement, talks of a constituent who bought her home in the 1940s and has seen her taxes go from $2 to $1,000 a year. "It points to the inequities of the property tax," he says. "They do not relate to a taxpayer's ability to pay."

Senator Montgomery says that his goal is to make the property tax fairer, but he admits that abolishment is a possibility. And a popular one, too.

That's what concerns educators and businesspeople here. "Property tax is a very unpopular tax," says Susan Kuziak of the Utah Education Association. She worries about lawmakers gaining support for the tax cut by playing on Utahns' acute sense of personal rights and portraying the tax as oppressive.

T he movement's unlikely opponent has become state Sen. Howard Stephenson (R), director of the Utah Taxpayers Association and a longtime advocate of tax-cutting measures. In a state where budget surpluses and tax cuts are now common, Senator Stephenson stands out as a cautionary force, warning that shifting taxes can do more harm in the long run. If the tax load shifts to corporations, some say, it may be difficult for Utah to lure new businesses and jobs here in the future.

Still, Montgomery is unmoved. "The business community's not hurting," he says, noting that at 5 percent, the state's corporate property taxes are among the lowest in the nation.

MEANWHILE, Democratic legislators are scrambling to craft a bill to address the perceived problems in the system without throwing it out completely. Stephenson is also fashioning one that would freeze property valuations at the purchase price.

And it is just such a compromise that may be the safest course, says Pete Sepp of the National Taxpayers Union. "Property taxes are arbitrary and unfair because most depend on government's assessment of your property - and that's often done through the window of an automobile," he adds.

In any case, even if the property-tax elimination is successful, implementation is a few years down the road.

The measure would need a two-thirds majority in the Legislature, voter approval to eliminate all references to property tax in the Utah constitution, and then it would go back to the voters in a referendum to approve any new taxes to make up for lost property taxes.

But with an election year coming up, and residents' dislike of property taxes only growing, success is not unthinkable.

"It could happen," says Speaker Brown.