Property Tax Reform

by Tiberius Gracchus on October 30, 2012

Our property tax system is in desperate need of reform. No longer should we support an overly complex wealth redistribution bureaucracy with our tax dollars.

We have a natural right to occupy land since God gave all mankind the earth. Our society respects that equal right amongst its citizenry and has been founded with the protection of property rights. Property taxes recompense the rest of the population excluded from your piece of land. The land owner sees improvement as necessary to that property so that those taxes could be paid and thus gains all direct benefit through that enterprise that provides that economic return, and in its original essence by changing the nature of that property it becomes his private property. Indirectly others gain through the landowners continuing improvement of his property, for instance, by creating a new market. Property owners should pay property taxes for the use of the land in its virgin state and not on any improvement upon the property ever. Other citizens do not have a natural right to what you’ve created through your own industry. However you do have a shared responsibility to pay public taxes in exchange for having access to what all other Americans mutually enjoy through that mass taxation. Taxing improvement to property is like attaching anchors to a airplane taking off from the ground, and one can only imagine the economic inefficiencies in such a scenario.

I could rest on a written statement for the foundation of philosophy of property taxes, however I would feel this paper to be hollow as a result. A current trend that exists in variations across the globe is Land Value Taxation, or LVT, and which may be the answer as an alternative property tax system. It streamlines part of the tax system and doesn’t punish those that would develop a property. LVT replaces our current property tax system and only taxes land as unimproved, ignoring all improvements by human hands. The land is taxed based on the potential benefit received through nearby public roads or other government services. If the unimproved land is taxed based on its soil value or land rent-ability is all up to question, however it must be constructed with common sense so as to protect the cattle rancher, for instance, from ridiculous tax increases. Also, with all that understood it is advocated as a way to stamp out land speculation, which I believe to be a natural by-product of a free market system and I won’t, nor should the LVT movement, advocate specifically against the practice.

The tax dollars will be replaced by taxing the increased economic activity that comes from allowing the property holder to spend their savings as they please. Taxing land in this way eliminates what economists refer to as dead weight loss that is created by the government distorting the efficiency of the free market through taxation or subsidy, and also promotes the utilization of otherwise vacate property. As already utilized, a two tier system where buildings and improvements are taxed at a decreasing rate while land itself becomes the lone taxable item after several years is possible to ease the shock of the property tax reform. Although the revenues going into the government may change I rest on the truth that I do not work hard to shovel ever greater amounts of gold unto the government. Our legislators difficulty in budgeting is not to be sympathized with. If Mr. X down the road has been taking, for instance, 10% of my produce every year and I find out about it and stop him then he’ll be upset. Mr. X will tell me he’s been making a boat payment with that money he’s been skimming off my success, and I’ll say “You can’t afford the boat then.”

There is an immorality in stripping equality from taxation when applied to progress and success that an individual can produce. All forms of taxation must and should be grounded with equality of application. As a Republic our representatives have legislated a tax code for us to follow because it is considered a reflection of our common belief in public responsibility or desire in the form of a cost sent back to us. Every tax should be tied to its original intent, for if I drive public roads then I certainly should be required to pay a tax attributed to that. It’s unjust when the government demands a greater percentage of wealth in tandem with rising success, which places me inequitably with everyone. The steady march of tax code expansion has reached ever farther and become more present in our lives. I see no justification for the growth of its reach, except to make up for government overspending, wealth redistribution, or as a weapon of discouragement against what one may consider a vice.

Our government is charged with protecting our property rights. Based on said protection they should stop this current and unjust property taxation that offends and hampers individual industry.

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