Why Are Residential Property Tax Rates Regressive

Posted4 months agoActive4 months ago

topaz0

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The debate around regressive residential property tax rates has sparked a lively discussion, with some commenters pointing out that expensive houses tend to be undertaxed due to inaccurate appraisals. One commenter, Findeton, stirred controversy by labeling taxes as "theft," prompting a rebuke from uberman, who argued that taxes are necessary to fund shared infrastructure and services. Meanwhile, others shared examples of more progressive tax schemes, such as Illinois' productivity index for farmland, and highlighted how wealthier homeowners can challenge their appraisals, contributing to the regressiveness of the tax system. The discussion reveals a complex interplay between tax policies, wealth inequality, and the influence of political power.

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Discussion (10 comments)

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topaz0Author

4 months ago

2 replies

I found this while looking for information about intentionally progressive property tax schemes. Not too surprising to find that expensive houses tend to be undertaxed (because they tend to be appraised below their true value), but I didn't have it in my mental model of wealth inequality, either.

Findeton

4 months ago

2 replies

I don't care about wealth inequality though. And trying to get taxes to be fair is impossible, as taxes are a form of theft.

uberman

4 months ago

1 reply

How do you propose paying for shared infrastructure and shared services if taxes are theft?

Findeton

4 months ago

1 reply

Infrastructure is 0.5% of the government spending and can be paid by use, for example tolls.

uberman

4 months ago

Most local tax, certainly the lion's share of property taxes go to public schooling and services like fire fighters, sanitation, police, public works, and park and rec.

Could we privatize all those things or set usage fees? Probably. Where I live many things like your well, sceptic system, garbage collection are privatized but that only works when one lives in the country. It would be impossible to privately implement most public services in urban settings. I don't think I would want to live in a city where trash collection was left up to the individual to work out how to address. Even then, you are going to end up paying for these services somehow right? In fact, I would rather my county work out a bulk trash collection contract likely at a discount and tax me for it based on the number of bedrooms I have than leave that to me to figure out with a bill I have to manage every month.

Your mileage may vary as they say but while I hate paying tax, I do enjoy the services they support and I don't see them as any kind of theft.

fuzzfactor

4 months ago

You do have a point, but in this case the original purpose of property tax is so that there is a provision for taxing authorities to confiscate the property itself, in case you or your heirs do not remain well-heeled enough to be fully welcome any more after the property is otherwise completely paid for.

The money collected by the levies has always been just collateral damage.

Gibbon1

4 months ago

1 reply

I remember reading a treatise on the Junkers in Prussia. Farmland was taxed per acre. Respective of how productive it was. So Junkers who owned the most productive farmland got taxed at the same rate as a poor hardscrabble farmer. And that before outright fraud and corruption.

stockresearcher

4 months ago

Here in Illinois all farmland is assigned a productivity index that is independently calculated by the agriculture department at UIUC using soil surveys. The land also gets a flood debasement index using flood records and crop loss claims.

The most productive farmland gets taxed at rates at least 4x higher than poor farmland. And really poor farmland gets taxed as if it were nearly worthless.

https://tax.illinois.gov/localgovernments/property/farmland....

bell-cot

4 months ago

From a skim, I see nothing about wealthier homeowners having broader political influence - to systematically (vs. one-off) encourage such less-than-fair assessments, and discourage reform.

Similarly, nothing about the incentives for residents (voters) in an area to use regressive property taxes as a poll tax - whether trying to prevent the less-well-to-do from living there, or to gear up gentrification for their individual benefit (higher real estate value).

uberman

4 months ago

Many more inexpensive homes turnover, so a more accurate appraisal is generally easier to obtain. The wealthier you are, the more resources you can devote to challenging your appraisal. When taken together, you get a situation where more expensive properties are likely to be less current with respect to the market and the affluent can then find more comparable under-appraised properties to base an appeal off of.

Don't get me wrong, it makes me super mad that my rich neighbors want to sell their homes for 10 million bucks but are fine being appraised at a million. I'll also comp to being in the same boat, but I really wish there was a way to more accurately keep all properties properly appraised so as to keep taxes fair. Particularly when school budgets fail due to the community not paying what they owe.

There is nothing new here though. The affluent will always be able to game the system (any system) more effectively.

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