These cities rely less on property taxes to fund city services

The work is a follow-up to ITEP’s 2024 analysis, which found that most local governments rely primarily on property taxes for funding.

“Sales taxes on necessities can make up a larger portion of lower-income people’s incomes, even if higher-income households are spending more dollars on sales taxes,” she said.

Property taxes have traditionally been considered more equitable than consumption taxes, Jefferson said, but as property taxes rise faster than household incomes, “it seems like the housing market is becoming more disconnected from how people make money.

Property taxes are theoretically proportional, but in practice property taxes are fairly regressive.”

But to be truly fair and progressive, the report concludes that cities should rely more on income taxes than either property or sales taxes.