In the last three years, a number of states have substantially reformed their property tax systems, providing huge tax benefits to owner-occupied homes and shifting the burden of paying for services like schools and police to commercial property owners (including rental apartment buildings)

That sounds like shifting the property tax burden from homeowners to renters - homeowners are generally wealthier than renters, so it's placing more of the property tax burden on those less able to afford it.

A major problem with property taxes on owner-occupied housing is that the value the owner derives from the house is not dependent on the resale value of the house. An owner occupied house is not primarily a financial investment in most cases. Any increase in housing value (and thus property taxes) is mostly an increase in the cost of living. Any gain in value cannot easily be realized since it’s not a liquid asset. This leads to a fear of being driven out just because the value of the surrounding neighborhood rises doesn’t mean that the owner’s income rises in lockstep.

One way out could be to tax the value gain at the time of sale, or when the house gets rented out, thus no longer being “owner occupied”.

My county appraises my home for much more than I could sell it for, and my property tax is based on that county appraisal. I have tried to get the appraisal down to realistic number -- I file annual appraisal protests.

I'm in favor of paying for public schools but would prefer the county appraise properties realistically and then raise the tax rate to compensate, rather than inflate the appraisal so they can claim a lower tax rate.

I don't like taxes but I also like having roads, sewage treatment, 100+ psi water pressure, multi-gigabit internet access, and a reasonably constant flow of electricity. The cost of public education and the management of that system is the only serious concern I have with my local taxes.

I actually don't mind the cost of living in my neighborhood going up. The $2500/yr HOA fee is a feature for me. I picked this location precisely because of it. I've lived in many places with virtually no maintenance overhead or economic friction. You may eventually learn that there are two sides to this coin. Neighbors who can afford and are willing to participate in ridiculously scaled housing markets also tend to take better care of their properties and local communities.

What I don't understand is (because I honestly haven't been afforded the time to sit down and think about it, also it's frustrating), why do taxes generally trend upwards for the average person? Doing napkin math it seems to have gone from ~10% to ~28% for average family. These are %-based, why does it need to change? Why can't cities/towns/counties work with the money their citizens can give?

Happening in Austin, Texas recently. City cites:

- Rising cost of core services

- Weak sales tax revenue. This is the city’s second-largest revenue source, and it has slowed or dipped.

- A shrinking property tax base. Officials point to falling property values, appraisal protests, more business tax exemptions, and little new construction adding value to the tax rolls.

- Disappearing one-time money. Pandemic relief funds have run out, and federal funding cuts were anticipated.

- Rising service costs. The new budget’s highlights include $6 million more for permanent supportive housing services, $6 million more for fire overtime to keep four-person staffing, and extra EMS overtime. Employee raises and social services were also major line items.

It is frustrating... if core services are costing more, cut extracurricular services? Why would you lean so much on sales tax, seems obvious this would revert to a mean? If your budget is reliant on infinite new construction it seems a bad budget? Why is pandemic relief cuts a shock to anyone? More housing services? I'm empathetic but there's more homeless than ever before. I know it's simplifying the problem but it just feels like people are punished with permanent tax increases for governments spending more than they should... we start with a new "floor" tax rate and repeat forever? Is it going to get to the point where we work 50% of our time just to pay taxes?

I think land-value taxation, with a cap on properties based on income (and wealth) for your first home, is the way.

I do think there is something special about the idea of home, and that home ownership should be encouraged. It brings people stability. People shouldn't be pushed out just because others have more income than them.

At the same time, we do need property taxes. In California, rate increases are capped, so older owners often pay pennies compared to new homeowners. Harmonize the taxes, while capping it.

In most jurisdictions (not califoria) property tax increases are somewhat unlinked from your actual property value

1) the tax entity sets their budget (usually an increase)

2) the valuation group values all properties

3) the tax entity sets a tax rate to raise their budgeted amount. budgeted amount = tax rate * total value

Most people think if their value doubles, their tax doubles. This mostly isnt the case. If everyone's value doubles, the rate decreases so they raise the budgeted amount. Mostly property tax increases are due to ever increasing budgets not rising values.

1) If everyone's value stayed the same, and the budget increased, your tax would increase by the amount of the budget increase

2) if everyone's value doubled, but the budget stayed the same, your tax would not increase

3) if your value doubled, everyone else's stayed the same, and the budget stayed the same, your tax would double.

I don't know how economics escaped basic elementary/middle school curriculum. There is so much confusion in people's lives around money, and so much destruction that results from it, yet we still don't teach the basics of what is going on in school. It's totally perplexing to me.

It seems like we should tax non economic wealth hoarding more not less. We have a glut of elderly people occupying houses that are far too large for their current needs while young families can’t afford larger homes. People forget that part of what property tax exist is to encourage dormant assets to trade hands from Low economic use to higher economic use. If some isn’t using a property to its highest and best use because there are no carrying costs then they will just hoard it and have no incentive to sell it to someone that could use it more productively.

It would make a lot more sense to increase the carrying costs of homes so that people are inclined to sell them when they no longer need a particular configuration.

"Housing should be affordable, except when I sell my house for a million dollars" (https://www.mcsweeneys.net/articles/housing-should-be-afford...)

> I would like the price of my home to rise, because it increases my wealth, but I would also like the prices of all other homes to fall, so that I could sell my house and buy an even nicer house.

There’s a way to do this. Buy in a VHCOL area like San Francisco, wait for 3-10 years, then move to Texas, Florida, South Carolina, etc. Real estate is highly localized so you do not need to stay in the same area all the time.

The homelab guy at CloudFlare did this because the prices of real estate in Austin are actually falling.

https://news.ycombinator.com/item?id=42156977

I feel like people don't realize that this is how aristocracy happens.

Like, yea, property taxes suck... but the point is you're wealthy even if you want to pretend you're not. Passing the tax burden onto others, just because you can, is exactly how we end up in a world where wealthy landowners live like literally nobility while the people renting their land pay the taxes for their infrastructure.

No property tax where I live, which is true for about half of the Swiss Kantons. There used to be a system where they would calculate how much you would be paid if you rented out your property and then charged you tax on that value. So basically a property tax.

But they got rid of that tax while at the same time removing the ability to deduct mortgage interest. So now it makes most sense to pay off your loans.

Mortgages are different here - they are interest-only loans for usually 1 to 5 years. And when the loan expires you have the opportunity to pay off as much as possible and then renew the loan for the remainder.

I think the surge in people wanting to reduce taxes is because it rose at an unexpected rate that no one was or could prepare for. So I almost blame the speed of increase for the recent conversations, rather than the idea of people wanting their house to rise and others to fall; yes that is part, but I don’t think it is the majority.

> the property tax ... has the standard problems of a wealth tax: specifically, you can have more wealth–say, the value of your home, your business, or your retirement account went up–without having immediate income to pay a higher level of taxes. Thus, older voters who tend to have higher accumulated wealth, partly in the form of home equity, but also lower current income, are a politically powerful and sympathetic group in the push to reduce or eliminate property taxes.

We should expect this phenomenon to grow stronger as more high-earners hit retirement age, right? I'd guess we have another 20-30 years at least before this incentive starts to "level out", and that's only if we somehow see wealth distribution become less extremely correlated with age.

There’s no reason the local government budget should increase at the same rate as the property values in the taxed area. Property taxes should generally increase at the rate of inflation not because property values increase.

However, where I live local government is wildly inefficient. So in that case property taxes should go down while property taxes go up via the expedient of competent governance. Alas.

I think it's a great idea to let land taxes create incentives for efficient building.

If you view homes as consumer goods rather than financial assets, the tension disappears.

I can see how, conceptually, shifting tax burden to companies rather than individuals puts public services at risk. Companies don’t really have a lot of incentive to want things like quality schools, parks, and other non-profit public services.

On the other hand, property taxes seem to be a pretty flawed system that still result in inequalities. Individual homeowners hate them and will do anything to lower their burden. More wealthy and mobile people will move to different jurisdictions specifically to save on tax burden. There are extreme examples like The Villages in Florida where the heavy demographics skew toward older residents means that minimal funding reaches services that benefit younger families who work there as service industry workers. My understanding is that this is a particularly extreme arrangement in the villages: if you lose your employment within the jurisdiction you have to pull your kids out of the local schools immediately.

Then you have issues where you get poor jurisdictions and wealthy ones based on property values. Some states help mitigate this by pooling property taxes across the state for school funding.

I’ve heard that many condo buildings in my area have a standing arrangement with a law firm to submit appraisal appeals every single year and the law firm is paid on a percentage based on the savings they achieve.

This system can’t be efficient for anyone involved. When you really think about it this is like a siphon of money that could be going into public services into a private law firm.

The thing about property taxes especially those that have owner-occupier exceptions is that they sort of work okay because they’re a good approximation for wealth. They’re still regressive but you can pretty safely assume that someone who owns a second home is wealthy enough to pay a high tax rate.

On the other hand, that arrangement passes more costs on to the lower income renter. Their property owner landlord has higher property taxes than owner-occupiers and theoretically passes those costs on to the renter.

I think someone could devise a better system and do away with property taxes as they function today entirely. We need a system that makes all the stakeholders in our society feel like every dollar they invest is a positive investment with returns.

Interestingly enough, it’s the opposite in NH. Our taxes just increase 1,000 each year to pay for horrible public schools while also giving state school budget funds to everyone that wants to homeschool or sent their kids to one of the many alternative schools we have. I would love to know how much of the US this actually reads as true for, because my friends in various other states also feel very similarly about their taxes going up and the housing prices not so much.

I swear so many societal problems have their roots in the attitude of "I've got mine, screw everybody else"

I've seen people completely change their attitudes about things once they own a home. I know a self-proclaimed liberal who claims to care about people suddenly go all NIMBY because they are buying a $2M house and now they don't want duplexes in their neighborhood and don't like the idea of more housing being built ("we're full"). They feel entitled to a high (and increasing) property value in a desirable area.

I hate it so much

My house has appreciated at a ridiculous rate. Personally I'd be fine if it hadn't. It's not in great shape. It's literally the cheapest house in town.

Corollary: I would like the value of my house to rise, and I would like housing costs to fall to make housing more affordable.

Fixing owner-occupied property taxes to the fair market value or sale price (whichever is higher) at the time of last change in ownership (by any means: purchase, inheritance, transfer, etc.), and then adjusting that amount annually or semiannually for inflation (to account for folks who bought their house 40 years ago and would otherwise get away with paying $5 in taxes) seems like the most reasonable compromise here if we want to retain property taxation (which is debatable - an income tax can achieve everything a property tax can, without punishing folks who own their house free and clear and no longer wish to work as hard as they did while paying said house off... or can't anymore). Modulo edge cases like inflation grossly outstripping investment returns (hi, 2020s!), this ensures retired folks can stay retired.

Taxation based on the theoretical monetary value you could extract if you sold your primary domicile is probably the dumbest possible policy, because it leads to people being pushed out of their homes (or our of retirement, or into higher-paying jobs they don't want, or whatever). Houses do not have to be viewed as investment vehicles, they can simply be residences.

As far as property taxation on non-owner-occupied units... up for debate, but I think fixing to most recent transfer time's FMV works reasonably well here, too.

Houses should be for living, not a financial instrument/investment.

Pretty much "I would like to eat cake for dinner, while my stomach gets salad."

> One might think that homeowners would be happy that their largest asset has appreciated substantially in value, as homes did,...

This is absurd. There's absolutely no benefit to you if the value of your house increases if you have no intention of selling it. That's exactly the point of treating owner-occupied homes differently from commercially owned property. The author should be embarrassed that he, as a an economist, doesn't know that in economic theory, households do not optimize for profit on some balance sheet, but for personal (subjective) utility. That's econ 101.

Just reading all of these comments. I am reminded as to why anarchists view property as theft

Millions of us: We would like to be housed please. We're still recovering from the 2021 rental markets that forced people with jobs and savings into homelessness.

Regime in charge: Enjoy these property tax reforms that will lead to higher housing costs and (further) transfer of wealth towards people who already own homes. Let us know what else we can do to keep people in lower classes trapped and vulnerable to exploitation.

I saw a post on YouTube about how someone's dad was struggling to pay their property taxes. One of the comments went like this:

"America, where you can spend your entire life paying off mortgage and then still be one missed tax payment from losing it all."

Is that true and how is this not perpetual serfdom if you can't ever really own a home?

And I would like for housing costs to fall and become commodity.

I think society should be structured in such a way as to incentivize contributing to society. Heal the sick, get rewarded, feed the hungry, get rewarded, teach the ignorant, get rewarded. Own a thing; no reward as far as I'm concerned. Owning stuff _is_ the reward, not something to be incentivized. It's its own incentive. Why should society give a gold star to someone for owning a toothbrush, or a house? They're a reward in themselves.

One of the most offensive beliefs in this context, one that has been normalized, is that a house is an investment.

Housing should not be a commodity

This is a potentially reductive take, but, property tax is theft.

In the guise of 'paying your fair share to be a part of society', property tax is essentially the institution of serfdom to the royalty of state bureaucracy.

Property tax is effectively the same as rent, but the one collecting rent also has martial and lawfare capabilities. Not to mention effectively unlimited funds with which to crush anyone who doesn't fall in line.

If what you have can be taken by another if you don't meet some set of conditions, you don't really own that thing, do you? It's more like a loaner than it is 'I own this thing'.

---

I'll offer a blanket alternative for state and federal taxation: no taxes on individuals, their income, or their property. Instead we tax exchange. States levy a 10% VAT on all transactions. Federal government levies taxes on interstate commerce, imports, and exports only.

All other forms of taxation are barred. New taxes may not be levied. If the state needs additional funds it may issue short or long term bonds accordingly.

Money printing is shifted away from being owned by an international banker's consortium, re-pinned to durable goods or precious metals.

So many of our current problems can be traced back to ever-increasing house prices. Homeowners who are voters have been duped into creating a society that allows the hoarding of land and turning your home into an "investment". This hurts everybody in three ways:

1. No matter how high the value of your house, you still own one housing unit of wealth. If you sell it, you still need to live somewhere else. So the only way to "get ahead" is to buy "investment properties", which is hoarding housing;

2. Housing costs are an input into everything you do and buy. Food more expensive? Well, if housing is more expensive then the workers who produce your food need higher wages to survive. The place where your food is made or sold has a higher rent. So higher housing prices decrease real wages even if you own your own home; and

3. When land becomes the best investment, which it has been for years, then it destroys any productive use of capital. It's competing for the same dollars. Why invest in a factory that makes widgets? That might fail. But a housing estate? Banks give you good collaterization. Governments create policy to make sure you will never fail. Demand is inelastic.

Ever-increasing house prices is just stealing from the next generation. That's all it's doing. Yet so many government polices are designed to enshrine and protect increasing house prices as an explicit and implicit policy goal.

The problems with property taxes are:

1. They don't go up fast enough. So it acts as a tax break to market incumbents. If property taxes properly reflected market value, it would act as a brake on increasing house prices.

2. Property tax increases are often capped (eg Prop 13 in CA); and

3. On an investment property, higher rents should increase property values because you've increased the value of the housing and land. This too would act as a brake on ever-increasing rents.

It should be essentially impossible for non-residents to own housing somewhere they don't live. Owning more than one or two properties should be punitively taxed if not outright impossible.

I would also like to not pay any capital gains on that property that rose in value.

Relevant article: The Median Voter is Maoist.

https://nicholasdecker.substack.com/p/the-median-voter-is-a-...

> Thus, older voters who tend to have higher accumulated wealth, partly in the form of home equity, but also lower current income, are a politically powerful and sympathetic group in the push to reduce or eliminate property taxes.

Miss on two points: there are exemptions for retired that freeze prop tax and equity is wealth that’s rare to access before death

I think most normal people, including me, don't like it when housing costs are so out of step with everything else. The "value" in your primary residence isn't very useful, unless you sell and move to a more depressed area.

I'm a multi-homeowner and I'd love it if house prices fell, or at least stopped rising.

This has been a sticking point for me for the better part of my adult life (~20 years now), and it all started with wondering who that dude in the taxi in “Airplane!” was: Howard Jarvis, one of the major proponents of California’s Proposition 13. From Wikipedia:

> The proposition adjusted the property tax rate, pegging it at 1% of the purchase price of the property.

That sent me down a rabbit hole of trying to understand why property taxes go down while home values go up, and why raising property taxes is so damn hard in so many states (it’s largely because of caps etched into law by Boomers in the 70s and 80s). It’s also why I have the strong opinions on the issue I hold today.

Tax displacement is a very real issue, but one that theoretically should be solved by a liquid property market where you can sell your home at FMV and downsize to another one you can afford. Americans, special creatures that we are, instead demanded we get the McMansions without the property tax valuations, while also deciding what housing gets built regardless of demand, while also keeping the distorted value of the home should we sell it for a retirement nest egg.

In other words: homeowners keep all the money, while paying decreasing to no taxes on it. This has been a significant contributor to the housing crisis of today, with shitbox properties in major cities selling for upwards of a million dollars but families pulling in not even a tenth of that in yearly income. The typical soundbite responses of “we need more housing” and “we need to reform or loosen regulations”, while technically correct, ignore the root incentive structure crafted back in the 70s with these sorts of inverse taxation schemes, and therefore leave the problem intact. We’d have to build so much housing, so quickly, that property values halve nationally for there to be any long-term fix to this problem, and nobody seems inclined to do this given the ponzi scheme we’ve discovered suburbia to be (just look at new developments in CA with dirt roads as an example of homeowners having to foot the bill and realizing it ain’t worth it given the thin density of suburbs).

And thus we arrive back at the beginning: we need to raise taxes on homes to reflect their high assessment values, which would displace existing homeowners who couldn’t afford said bill, which is leading to the same demographics as before demanding the same solutions as they enacted in the 70s and 80s: caps, limits, or shifting costs onto less-advantaged demographics (like renters via commercial real estate). As perverse as it sounds to most Americans, the actual solution is to finally let property taxes “float” with valuations in their entirety, no caps or cuts, and let the market sort it out. Will that lead to some folks becoming homeless? Yeah, and that’s a whole other ball of wax we’ve ignored dealing with precisely because we catered to homeowners as a political group, but that’s infinitely more solvable than trying to build our way out of a housing crisis engineered by lower taxes and controls on builds.

We gotta eat the pain up front to find a better collective tomorrow for everyone.

Lol

Well good news! Because taxes are there to pay for services, there's absolutely no reason why they should increase just because the value of your property... Oh that's not how local governments see it?

Well at least your property value will go up endlessly. No bubble there. Totally not based on speculation.

lol

Having sat on a county assessment appeal board, this is basically every hearing. People want the comps high when they sell and low when the notice arrives.

Another one of these. Lets see... they want the value of their house to go up but everyone elses down so they can trade up, the gain without the carrying cost any other investor pays, lower taxes because prices are high and the cut pushes prices higher so owners get the windfall and the next buyer eats it, schools and police but push the bill on commercial and rentals, renters pay it back in rent anyway

Fix is not complicated. Tax land not buildings, flat exemption under the primary residence off the local median so nobody proves income, defer the rest as a lien till sale for the cash poor

I would like to work less hard, make more money, and date prettier girls than I currently do.