Taxes by installment
Property owners are less likely to be late with their tax payments if they made three installment payments a year instead of two, according to new research by Lincoln Institute visiting fellow Andrew Reschovsky.
The delinquency rate drops by nearly half if the number of payments is increased from two to three, says Reschovsky, a public policy and economics professor at the Robert M. La Follette School of Public Affairs at the University of Wisconsin - Madison.
The statistical analysis, done with Paul Waldhart, an analyst at the Wisconsin Legislative Audit Bureau, is of data from Wisconsin municipalities for 2005-2009. “Around the United States, more people are late with their property tax payments,” Reschovsky says. “In Wisconsin, the delinquency rate was 2 percent in 2005. In 2007 it was 2.5 percent, and by 2009 it had risen to 3 percent.”
Of Wisconsin’s 1,850 municipalities, about 60 allow more than two installments for real estate taxes, Reschovsky says. These municipalities are generally larger: of Wisconsin’s 38 municipalities with populations over 20,000, with 22 allow multiple installments. In addition, collection methods for delinquent payments vary across and within Wisconsin counties. Some municipalities collect their own delinquent taxes, while many others give the county this responsibility.
On average, in fiscal year 2009 local governments in Wisconsin relied on the property tax for 65.2 percent of their own-raised revenues. In only six states did local governments raise a higher share own revenues from the property tax. Reschovsky and Waldhart’s study, started after City of Madison Treasurer Dave Gawenda noticed an increase in property tax delinquency and wondered whether increasing the number of payment installments would bring it down, is available as the Lincoln Institute working paper Property Tax Delinquency and the Number of Payment Installments.