In the morning everyone. So, did you see this tripe and dribble on John C Dvorak‘s twitter feed ( https://twitter.com/THErealDVORAK ) this weekend regarding taxation, wealth taxes, and property taxes?
- People bitch and moan about inequality and high taxes. This would all be resolved by a Swiss-like wealth tax. Why is it not on the table?
- People say a wealth tax is impractical and hard to implement. Well, property taxes are a wealth tax and they are implemented just fine.
- A wealth tax would satisfy both Warren Buffet and Bill Gates who claim they want to pay more taxes. This would solve their grievance.
- Income taxes are unfair because they do now allow people to accumulate wealth. A wealth tax is the only fair tax.
Forget the arguments of a “wealth tax” in general for the moment, let’s focus on PROPERTY TAX as a wealth tax and being “implemented just fine.”
Property taxes are the WORST and MOST REGRESSIVE tax of any kind because THERE IS NO CORRELATION BETWEEN THE TAX AND THE ABILITY TO PAY!
With an income tax, the more one earns (i.e. more income) the more income tax is levied and paid which theoretically one could afford to pay. With a sales or consumption tax, the more one buys or consumes the more the tax. If you can’t or don’t want to pay the tax, don’t buy the item (side note: we’ll discuss sales tax on food and its regressive nature on the poor in another post).
But with property taxes THERE IS NO CORRELATION BETWEEN THE TAX AND THE ABILITY TO PAY!
Just because some government hack declares that my property has increased in VALUE, it is therefore subject to more tax. This has no relationship on whether I can pay said tax.
For instance, a young newlywed couple buys a fixer upper in an up and coming neighborhood. Put lots of sweat equity into making a lovely remodeled home thereby increasing said home’s value. Maybe others see the same in the neighborhood and do likewise. Now said Revenuer says these homes have all doubled in value and therefore their property taxes have doubled. Can this newlywed couple pay double the amount of taxes? Did their income double? DID THEY EVEN REALIZE ANY OF THE INCREASE OF VALUE OF THEIR HOME? Hell No! Just because their home increased in value they WILL NOT REALIZE ANY OF THE GAIN UNTIL THEY SELL! Of course at which time they will be taxed AGAIN on that increase, the same increase they have been taxed on every year through property taxes for the mere pleasure of owning a home. But does the Revenuer even care? Hell No. Can’t pay the property taxes because said value has increased, “Well then just sell your house!” says the Government.
Not only are property taxes REGRESSIVE they are merely rent paid to the Government for the privilege of owning something.
Let’s take another example to see how destructive and regressive property taxes are. Look at the “greatest generation”, they come back from the war, settle down and start a family. Maybe get a nice blue collar union job and put in their 30. Along the way they buy a nice house in San Francisco¹ and scrimp and save to do so. In the meantime they age, they have paid off the mortgage on the house, and now look forward to retirement. But wait says the Revenuer, San Francisco is now valuable property, why look at all these techies flush from the Federal Reserve pumping cash into the stock market. The Techies want to live in SF now and are driving up the prices and the boomer’s house is now taxed at double or triple the previous tax. Again, does the Government care that the retirees on a fixed income can’t pay double or triple the tax? Does the Government care that said retirees haven’t seen or pocketed one cent of the increase of VALUE? Hell no¹.
And that ladies and gentlemen is the sheer and utter fallacy of property taxes as a wealth tax and being “implemented just fine.”
p.s. if Dvorak keeps this crap up, Curry will no longer be considered the Crackpot!
¹ Thank God for CA Prop13 which limited annual increases of assessed value to an inflation factor, not to exceed 2% per year, but that doesn’t help the rest of the country so substitute the up and coming popular are in your state.
p.p.s And NO, Prop13 did not cause the current financial mess. The legislature willfully spent more than they took in to create that mess.