The new tax law in the United States, which limits the deductibility of property taxes, has highlighted just how much property taxes can vary. (This site offers some hard numbers comparing median property taxes between states.)
I'm wondering why property taxes vary so widely. I used to think it had to do with population density. The cost of maintaining e.g., a public road is more or less the same no matter how many people use it, and so if you have lots of people living and paying taxes on a street, each person should not have to pay much to maintain it. But that theory does not seem right because most densely populated states (e.g., New Jersey) also tend to have the highest property tax rates.
I sense that another factor is the way local governments are organized. I used to live in the South, where the only municipal government was the county. There was only one police department, one school district, etc. for everyone in the county. I assume that part of the reason my taxes were lower under that model is that the municipal agencies were larger than they are where I currently live, where each town or village tends to have its own police department, fire department, etc. If everything is organized at the county level, you only need to pay one school superintendent, one police chief, etc.
That said, I doubt that the size and architecture of municipal governments can fully explain tax rate variations. If that were the only reason why people in some locations pay taxes that are ten times higher than those elsewhere with homes worth the same amount, then you'd think there would be enormous pressure to solve the inefficiencies by reorganizing the municipal governments.
Obviously, the level of services provided by local governments also affects tax rates. If you don't have a professional fire department or a public library, for example, your taxes can be lower. But here again, this different doesn't seem large enough to explain the enormous variability in tax rates. (It's not as if no one living in low-tax states has public libraries or fire departments.)
What other factors are at play in driving property tax rates? Why do some states and regions seem to have such difficulty keeping property taxes affordable?
(Note that I'm asking about local property taxes, which could also be interpreted to include income taxes and sales taxes that are imposed by a local municipality. State income tax rates are a somewhat separate question.)