Rep. Marjorie Taylor Greene (R-GA) has pivoted from a bonkers approach to foreign affairs to backward fiscal policy in her continued attempt to achieve relevance despite her attacks on President Donald Trump‘s administration.
“We need to completely abolish property taxes,” Greene said in an Aug. 19 X post. “It forces us to pay ‘rent’ to the government on property that we own, but if we don’t pay property taxes, the property that we own gets taken away from us. That should never happen in a free country.”
This sophomoric assessment of property taxes has a kernel of a good point — that a state or local government can eventually seize a home after a lengthy period of an owner’s tax delinquency. And as a first-time homeowner, I understand the emotional response to the indefinite nature of property taxes. Even if you finish paying down your mortgage over 30 long years, you will still owe a regular sum in property taxes.
But the property tax is arguably one of the best forms of taxation and the single best source of reliable revenue other than one: the land value tax. Property taxes limit economic growth less than personal income taxes, which harm economic growth less than corporate income taxes.
A property tax is indexed to a home’s assessed value. Yet a land value tax only applies to the value of the land itself, not the buildings on top of it. This means that a land value tax does not discourage improving a property, while a regular property tax does.
And a land value tax discourages the sort of speculative investments that have helped turn the American dream of home ownership into an inflation-evading game of musical chairs.
Another way to think of the difference is how a property’s surroundings would influence the tax bill. For example, in Southern California, a land value tax would be higher along the Santa Monica coastline than in the Inland Empire, the sprawling suburban and exurban desert region an hour-plus east of Los Angeles. This is because oceanfront Santa Monica has superior natural resources, ambiance, and government infrastructure and services.
A land value tax wouldn’t punish a resident in either neighborhood for, say, building a swimming pool or adding an accessory dwelling unit on their property relative to the tax bill paid by their next-door neighbor. Milton Friedman called the land value tax the “least bad tax” for good reason.
Transitioning to a land value tax would encourage home development for more families. But abolishing a property tax would fully freeze younger and lower-income folks out of the housing market because, in part, higher property taxes often lead to lower home prices, which reduces the down payment required for a homebuyer seeking a mortgage.
In the context of the current highly restrictive zoning codes that disproportionately dominate Democratic areas, eliminating property taxes would also encourage empty nesters who otherwise no longer need larger homes to stay put, while growing families would be crowded out of home ownership.
HOUSE PREPARES FOR FUNDING DEADLINE AS PARTIES WAR OVER EPSTEIN, REDISTRICTING, AND DC TAKEOVER
What do actual Americans want? Well, the only two states with zero income tax but an above-average effective property tax rate, Texas and South Dakota, had the 11th and 12th highest rates of net domestic migration from the spring of 2020 to 2024. Zero-income tax states such as Florida can proceed with property tax reduction or, better yet, land value tax reform.
For the rest of the country, local governments would be better off slashing the personal income tax rates that are terrifying voters into fleeing for red state residences.