Securing Ownership by Eliminating Property Taxes: A National Framework for Reform with Montana as a Case Study

5/26/2026

Across America, frustration with property taxes is reaching a breaking point. States including Florida, Iowa, Kansas, Montana, Nebraska, North Dakota, Pennsylvania, South Carolina, Texas, and Wyoming, and likely others soon, are actively debating ways to reduce or eliminate property taxes. This is driven in part by worsening housing affordability and by taxpayers facing higher tax bills that often grow faster than income, inflation, and population growth.

Property taxes differ from most other taxes because they apply to ownership itself. Even after a home is fully paid off, homeowners must continue paying annual taxes simply to keep their property. Failure to pay can ultimately result in government seizure of the property. For many Americans, especially retirees and working families on fixed incomes, this creates growing financial insecurity and undermines the concept of true ownership.

The economic effects extend beyond homeowners. Property taxes raise rents as landlords pass costs through to tenants. They increase operating costs for businesses, reduce investment, distort housing markets, discourage mobility, and raise costs across the economy. Recent research has also highlighted how property tax assessment systems can disproportionately burden lower-valued homes through unequal assessments and appraisal practices.

At the same time, rising property taxes are primarily a spending problem. Property tax collections increase because government spending increases. Relief efforts that do not address spending growth often provide only temporary reductions before taxes rise again.

This report examines the broader economic and fiscal problems associated with property taxes and evaluates multiple reform options available to states. These include:

levy and revenue limits,
spending limits,
surplus-driven tax rate compression,
broad-based consumption tax reforms,
school finance restructuring,
assessment reforms,
local tax restructuring,
and constitutional taxpayer protections.

Rather than advocating a one-size-fits-all solution, this report presents a framework that states can adapt to their existing tax systems, constitutional structures, economic conditions, and political environments.

Montana is a particularly important case study because it currently lacks a broad statewide sales tax. This creates a unique opportunity to examine how a constitutionally limited consumption tax, paired with strict spending restraint, could reduce or eliminate large portions of property taxes while maintaining funding for core government functions.

The report argues that durable property tax reform must begin with controlling government spending growth. Limiting spending growth to below the rate of population growth plus inflation creates the fiscal space needed for long-term tax relief while improving transparency, accountability, and taxpayer protections.

Ultimately, the broader debate is not simply about taxation. It is about ownership, affordability, economic opportunity, and the proper role and size of government. States that successfully pair fiscal discipline with structural tax reform can improve housing affordability, strengthen economic competitiveness, and restore greater security for homeowners, renters, workers, and businesses alike.

Check out the interactive tool constructed by my co-author Joseph Johns. Here's what it looks like...