The highest property taxes in America (© iStock)Click to enlarge picture

Lake County, Ill., ranks No. 1 for the Midwest region on Forbes' list of U.S. counties with the highest property taxes. // © iStock

No one looks forward to the day their annual property tax bill arrives. But those in affluent Westchester County, a suburban swath of New York that includes areas such as Rye and Armonk, most likely dread it more than most. That's because homeowners fork over a median $8,404 per year to live there. That's seven times more than the $1,180 national average, and on a dollar basis, the highest in the nation.

Across the country, Marin County, Calif., holds a similar distinction. While not as lofty as Westchester's, the region's $5,233 median annual property taxes are the highest in the West. Residents of Loudon County, Va., a wealthy suburb of Washington, D.C., pay most in the South, or $4,844 annually. And in the Midwest, those in Lake County, Ill., lay out $6,050 a year to own a home.

Behind the numbers
In ranking each county, we used the 2008 U.S. Census' American Community Survey, which is conducted every year with a smaller sample of Americans than the decennial census (one home in every 40 receives the ACS, as opposed to the one in six that receives the 10-year census). The survey asked property owners how much they spent per month in property taxes. Researchers then used the median number per county over three years: 2006 through 2008. We separated the data into the four census-defined regions: West, Midwest, Northeast and South, and ranked counties by their percentage above the national average property tax. (Click here for a full list.)

What's your home worth?

Three of the country's top five highest-taxed counties — Westchester, Nassau and Rockland — are in New York state. Homes in these areas are pricey — in Westchester the median home value is $581,900, three times the national average, according to census numbers — which naturally helps drive up those bills. But another factor is at play here: Counties in the census-defined Northeast region tend to be carved into an array of towns, villages and municipalities that don't derive their property taxes from statewide levies. This results in a greater dependence on property taxes for local revenue. Because the region also has highly concentrated pockets of wealth, it takes 19 out of the top 20 spots for highest-taxed counties.

See video related to: c90dbf58-3322-4610-a5c0-6a15fa433021
This video requires the Adobe® Flash® Player. Download a free version of the player.

"The more emphasis you put on local autonomy, the more you're going to have local taxes picking up some of what, in other areas of the country, would tend to be state-level responsibilities," says Joan Youngman, senior fellow at the Lincoln Institute of Land Policy, a Cambridge, Mass.-based think tank that researches land taxation issues. "When there's an emphasis on local government, it often means there's an emphasis on property tax."

But even in spite of big-government measures meant to ease one's property tax burden, hefty bills can result if home values are high. Proposition 13, a piece of tax legislation introduced in 1978 that strictly limits property tax burdens, calls for Californians to pay only 1% of their home values in real-estate tax.

In Marin County, a mountainous Bay Area suburb packed with sleek, expensive homes, the median household income is $88,101, and homes are valued at a median $912,100, with a median annual property tax of $5,233, more than four times the national average. It's the same story in Santa Clara County, Calif., where taxes are $4,437, and San Mateo County, Calif., where the annual bill is $4,208.

"Even in a situation where we're dealing with the classic original, trendsetting tax limitation measure, when you have property values as high as you do in Marin, you're going to have high property taxes," says Youngman.

Sometimes a county's high property tax rate has little to do with home values. In states where the federal or state government owns a big portion of the land, property taxes are concentrated in the privately owned segments of the state, and are typically high. Of the top 10 highest property tax counties in the West, King County, Wash., and Anchorage Municipality, Alaska, were the only non-California areas. In Washington, 30% of land is federally owned, and in Alaska, it's a whopping 69%, the highest percentage in the country.

High property taxes, in addition to providing extra local services, often compensate for low sales or income taxes. That works fine during boom times, Youngman says, but disproportionately affects struggling homeowners in recessions. But swinging the pendulum in the opposite direction isn't necessarily the answer, either. An even balance of revenue sources can avoid unduly burdening one segment of the population.

"A mixed-revenue system avoids putting the pressure on one single tax," she says, adding that no solution is likely to appease the whole populace. "No tax is popular. Any place you look, people are going to be upset about certain aspects of it."

The highest property taxes by region

Region Avg. annual property tax
MidwestLake County, Ill.$6,052
NortheastWestchester County, N.Y.$8,404
SouthLoudoun County, Va.$4,844
WestMarin County, Calif.$5,233

Click here to see Forbes' full list of counties where Americans pay the most in property taxes.