Taxing Tax Reform

A progressive makes the case for property taxes


| July-August 2011


Restore the property tax! Restore the property tax!

It’s not a chant you’ll hear anytime soon at a Tea Party rally or even a liberal political potluck, but the progressive social-justice magazine Dollars & Sense(March-April 2011) makes the case that the property tax, “the original wealth tax,” is perhaps the fairest tax—and that, properly levied, it could prevent massive cuts in public services.

“It’s the oldest wealth tax of all, the tax that financed Chinese civilization over 2,000 years ago, the tax that until World War II financed most of the government in the United States,” writes Polly Cleveland, an adjunct professor of economics at Columbia University’s School of International and Public Affairs.

Since then, states have shifted to income and sales taxes, and most property taxes now go toward local government, especially school districts. This creates a stark and often criticized class disparity, Cleveland explains: “Within the same state, rich districts can finance good schools at low property tax rates, while poor districts can only finance lousy schools at high rates. But this is not the fault of the property tax; it would be equally true of any local tax.”



Cleveland suggests shifting school financing in part to the state and federal level and reclaiming the property tax as a progressive tax tool, arguing that, because property ownership is concentrated among the wealthy, property taxes are actually even more progressive than income taxes.

Of course, Cleveland knows that she has some lobbying work to do, given that most people have come “to perceive [property taxes] as obsolete, unfair, and a burden on the poor and middle class.” This, she claims, constitutes a PR victory for the rich people and corporations who reap most of the benefits of our anti–property tax fervor.

steve eatenson
7/28/2011 10:17:06 AM

I think this is an interesting idea if by property you include all tangible assets including bank accounts, stocks, bonds, savings accounts, money markets, etc. It should include all tangible assets as property. Would there be a graduated tax percent based on an individuals total asset worth? How would you monitor this for cheaters? If I owned a rare diamond worth 10-million dollars, how would you know? If I owned controlling shares of a corporation, would that be taxed as an asset? If I owned an individual propriator business or partnership worth millions, would that be taxed as a personal asset? It should be. It would be very complicated to fairly implement this system, wouldn't it?


JWT Meakin
7/27/2011 2:32:13 PM

I agree with Lisa. Shifting a tax burden from income and purchases to property is fine so long as one has income. However, if a person has, like me, paid income taxes at a high rate for many years; has purchased property out of the remainder; is now expecting a significant drop in income and is organizing his life to minimize expenses; then switching the tax code so as to add a large fixed tax burden on taxed savings represents double taxation.


Ephy
7/27/2011 12:08:08 PM

Lisa...this 'most meager piece of property' you describe still leaves the owner with more benefits than liabilities at the end of the day (and if not, then sell it). Annual property taxes will be lower than an annual rent amount for similar property, plus the taxes can be deducted from your taxable income while rent cannot. All people, all the time, are 'compelled to bring in...monetary income' and owning land can help in that equation. I can't help but shake my head when asked to feel sorry for those poor, poor landowners.















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