A Fair Tax

Is the Property Tax a just and equitable tax

The fundamental issue with the Property Tax is the question of fairness. How we can reasonably ask everyone to contribute to funding the essential functions of government? As much as we all like to get every tax break we can, there are few who object to paying taxes as long as it is a level playing field. Thus, we do not object—in principle—to paying our fair share as long as we are convinced the system is not rigged against us. It is only when an advantage is given to others at our expense that we object.

The Property Tax does not meet this requirement.

The Property Tax has a built in disadvantage to those at the bottom end of the income scale. The less you make, the greater its impact on your finances. Inversely, the more you make, the better a deal it is (especially when you can get a farm land assessment merely for selling $500 worth of firewood each year). The result is those needing less of a tax break are getting one while those who need every penny they have are making up the difference.

What is it that causes this inequity?

How can this be? Easy. It is because the Property Tax does not take into account one’s ability to pay. Take fifty people with equally assessed homes. They will all pay approximately the same amount of property tax. But they will not each have the same income. Thus, those making less pay a greater percentage of their income in property taxes. In fact, the 20% lowest wage earners pay almost three times as much as a percentage of income as the top 20%. And the lower you go, the greater the disparity.

An example
Here is an example of how that works. There is a 79 year old widow (I personally know her) who has been in her home for 51 years and would like to live out her days there. She has income of $21,000 a year. Her property taxes are $5,500. That is over 26% of her meager income. And since taxes will be going up several hundred dollars every August, that percent will be increasing. She is desperate.

In N.J., the income tax rate on $500,000 in income is 9%. So, even if all those who blame spending as the culprit for high property taxes were able to cut this woman’s tax bill in half (impossible and will never happen), she would still be paying 13% of her income in taxes; that is a rate 50% higher than the $500,000 taxpayer.

The Question to Answer

Is this fair? Is this right? Clearly the answer is no. The property tax is inherently unfair and must be eliminated. This is the only conclusion to be reached because there is no way to structure a property tax to eliminate its inherent detrimental affect upon those at the bottom. If income is taken into account to mitigate its affects then that becomes a tacit admission that the income tax is the only just and fair way to collect taxes. And that confirms the Property Tax is wrong to begin with.

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