Price-Cap Regulations on Property Taxes & Consequences

Amid soaring housing prices and a rising cost of living across the state, a suite of property tax proposals have come to Colorado’s legislature in recent weeks. Property tax rates are assessed every two years, so as housing prices rise, so does the tax burden on Colorado’s homeowners. Colorado is not the first state to run into these issues, and numerous others have enacted measures in an attempt to provide property tax relief to their residents. 

The new package of bills proposed in Colorado may most similarly resemble California’s Prop 13, which capped assessment value increases and introduced other provisions meant to reduce property tax rates. And, while Prop 13 may have succeeded in reducing rates, it unleashed a bevy of unaccounted-for fiscal consequences that distorted the housing market, created barriers for first-time homeowners, and leeched state revenue from other essential services.

In this brief we assess the impacts of Prop 13, as well as three additional measures passed or proposed in other states, in an effort to clarify how we in Colorado can address our emerging property tax issues in a more fair and equitable way.

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