property tax reform in SF and Boston

An article in the WSJ from Steve Hanke and Stephen Walters on property tax reform in SanFran and Boston-- and the author's application of that prospective reform to Buffalo's situation (hat tip: Linda Christiansen).

This sort of thing is interesting in its own right, but especially in light of Indiana's recent history with property tax "reform" and the nationally, the "housing crisis".

The chattering classes have offered many proposals to stabilize the housing market, from cutting interest rates to rewriting mortgage contracts to generously giving out government subsidies to lenders and borrowers alike.

But there is a much simpler, more elegant solution to lowering monthly costs for homeowners: cut property taxes. This solution will not distort the market with payouts to bad actors or violate the sanctity of contracts. And it would help stimulate the economy.

There is probably no place where property tax cuts are more urgently needed than in upstate and western New York -- all the territory of the state outside New York City's five boroughs and Long Island.

Today the once prosperous upstate economy is in tatters. It's been in an economic decline for decades, giving much of it a Depression-era feel. A quarter of Buffalo's housing stock is vacant and its poverty rate is twice the nation's. The city has lost half its population since 1950....

One reason for this is that the region has become property-tax hell. A look at the numbers tells the story. When every U.S. county is ranked according to its average property-tax bill as a percent of home values, nine of the worst 10 are in upstate New York.

All housing markets are local and local government policies can have an enormous impact on property values. Higher property tax rates, for example, inevitably send home values downward. Why? A $6,000 tax bill adds $500 to a monthly mortgage, and simultaneously reduces the amount a buyer would be willing or able to pay for a home. Cut the tax bill and you help struggling homeowners hold onto their houses. And lower taxes allow would-be buyers to spend more for homes. High property taxes also discourage investment in new homes. Builders won't build where property taxes drive buyers away....