Question

From the vantage point of a property taxpayer, why might you think the property tax is a bad tax?

Answer 1

• Property Tax( also called millage rate )is the major source of revenue for the governments at the local/municipal level.
• It may be levied on real estate (business purposes) or personal property (non-business purposes).
• Originating in the colonial times, there have been heavy debates about advantages and disadvantages of levying the property tax (much like the income tax) due to numerous issues including fairness, progressivity, real ownership etc.
• From the vantage point of a property taxpayer, I have discussed a few of the reasons why I think property tax is a bad tax:

1. Death Tax for the wealthy and successful- It is like a death penalty to successful individuals who have amassed wealth either on their own or by way of inheritance.
2. Double Taxation - Real estate is generally purchased with after-tax income which makes it double taxation which is proven to be a harmful taxation practice for the economy all over the world.
3. Low savings and thereby lower investment- Individuals prefer to save less for the purpose of investing in real estate because it is such an expensive and legally complicated affair.
4. Extremely harmful to smaller businesses when not taxed progressively.
5. Negative results in Cost vs Benefit Analysis -Revenue raised is less than 1% of tax revenue raised annually which is offset by high collection expenses like valuation and compliance burden.
6. Expensive and cumbersome affair- Right from hiring a real estate consultant to expenses to contest the value of their own property, there is little doubt to the fact that it's an expensive and cumbersome affair for an average law-abiding citizen of the country.
7. Affordable housing a dream for all - High property rates coupled with raised interest expense on home loan and property taxes make it impossible for the average citizen to afford housing early in life.