SALT Matters

As a property owner’s biggest operating expense line item, underwriting property tax liabilities as part of pre-acquisition investment due diligence or operational budget forecasting and control is challenging, as evidenced by the magnitude of the consulting industry.

Complicating matters since 2010, 69 municipalities across the US (680 since 1937) have filed for Chapter 9 bankruptcy, and not all states permit this.1 In fact, most state and local governments are experiencing fiscal pressures attributable to:

  1. Unfunded pension and healthcare benefits promised to a rapidly retiring workforce,
  2. Unionized workforces that can’t be fired but are earning private-sector, or higher, compensation at levels that are unsustainable,2
  3. Expanded demands for services due to changing demographics, and
  4. Federal employees earn 32% more than their private sector compatriots3, and state employees earn 40% more.4

Because of these pressures and the fact that property tax is the primary funding vehicle for local government, assessors are becoming increasingly aggressive. Recent papers promoting new valuation concepts and definitions, authored by assessors and their attorneys, are confusing the public, the courts, and are undermining trust in the appraisal profession at-large. And, assessors use tax revenues to lobby and advocate against their constituents’ interests.

This public-private sector fiscal tension creates investment disincentives for taxable real estate, putting downward pressure on development and transaction activity.5 Unlike federal tax issues, most C-suite executives are unaware of the magnitude of their company’s property tax liabilities because they are not addressed in SEC filings.

Prior to enactment of the new federal tax law, this issue was masked in some states. The true cost of state and local government is only now being realized by some taxpayers, due to the $10,000 deduction limitation.

State and local governments that do not minimize taxation will continue to suffer taxpayer disintermediation from both residents and private-sector job producing entities; the “golden goose” will get up and leave. Elevating awareness of these challenges will educate for the betterment of communities across America.


  2. 1968 JFK Executive Order 10988
  3. 2017 CBO long-term report
  4. Two Different Worlds: Public vs. Private Sector Compensation. Citizens Against Public Waste, 2012



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