Dumping Property Taxes

Chuck Holes in the Economy

The good people at the Platte Institute are hosting a bunch of “Truth In Taxation” events across Nebraska (https://platteinstitute.org/nebraska-truth-in-taxation-resource-page/). They are basically trying to get people to show up to meetings held by taxing authorities.

I speculate what they will tell people is nothing really new and appears to be an effort to tap down calls for major tax reform. In fact, I am in the crowd of “been there, done that. It does not work”. But people are addicted to the futility of thinking a revolution is around the corner. None of these events are likely to get to the root cause of understanding economics and taxation. So, let me do it for you.

Sales tax is based on your ability to pay.  If you are not able to pay, you do not buy and pay no tax.

Income tax is based on your ability to earn. If you do not earn, you do not pay the tax. If you do earn, you will make efforts to pay less taxes or make others pay them.

Property tax is based on your ability to own. If you do not own, you do not pay directly. If you do own, you will do your best to pass the cost on to others.

So if to be happy in not paying property taxes, you have to own nothing!  

Oh, and before you buy into the World Economic Forum hype, the quote actually comes from Danish politician Ida Auken, in 2016, and she was merely speculating where technology is taking us. We live in a new economy where many people can work at home, in their apartments, and have little need for material things (https://www.globalagendamagazine.com/youll-own-nothing-and-youll-be-happy). The digital economy is changing the way property is viewed, and to how much is needed. The pandemic accelerated this. With the change, taxes must change too. The property tax is actually a wealth tax imposed upon the property taxpayer on unrealized gains in the value of the property and is repetitively charged even when the property produces nothing and does not change in value. This would work if the property was producing something but residential property does not. This is fundamentally unfair. This is why the EPIC consumption tax is gaining favor (https://epicoption.org/).

The only real tax relief from the Unicameral this year was to remove the Metro Community Colleges off the property tax system (https://nebraskaexaminer.com/2023/04/03/property-tax-portion-of-nebraskas-tax-relief-package-advances-41-0/). The rest is largely a futile effort of shuffling chairs on the Titanic. (Iceberg!)

Unfortunately, many do not understand how property taxes function in the economy. They think they pay no tax on their prescription medicines and their grocery items, but they do! Just not directly. The same can be said for renters. Go look up your favorite grocery store and pharmacy on the property assessor site (https://dcassessor.org/valuation-lookup) and follow the property report to the Treasurer’s tax report and you will find your favorite places are paying tens of thousands of dollars in property taxes! The property tax is a dead weight to the economy, like a bunch of chuckholes in the street. The taxed business ends up passing these taxes on to the consumers which jack up the prices in the area. If you make a point of traveling around the Midwest, you will find there are places where prices of goods drop suddenly. This is because the area is not as heavily taxed. If the property tax was eliminated, many prices will go down.

Many people are taking potshots at the consumption tax idea. If you get rid of the property taxes, business competition would increase and prices would go down. At the same time, the velocity of the economy would increase. If a consumption tax is adopted, there will be temporary disruptions in the economy as businesses and people figure out how the taxation system works. No plan is perfect and adjustments may need to be made. However, the positives vastly outweigh the negatives.

My biggest concern is a consumption tax would generate way too much revenue because none of the estimates have calculated in just how much of a dead weight property taxes are to the economy. Again, property taxes are not based on your ability to produce, earn or pay and thus are exclusively a penalty for existing, and generates no wealth.  Remove the property taxes and the economy will expand, and everyone will benefit.