324 sats \ 3 replies \ @SimpleStacker 27 Dec 2023 \ parent \ on: The Evil of the Residential Property Tax libertarian
Hmm, how would you respond to the rather traditional view that property taxes are less distortionary than income and sales taxes because real estate is less elastic? e.g. People, jobs, and sales can move, but the land can't. If we accept that taxation is a reality to contend with (death & taxes and all that), shouldn't we use the least distortionary tax possible? Texas, for example, favors property taxes over personal income taxes, and I think it's good policy.
Not trying to be contrary or anything, just genuinely curious how you'd respond to this commonly held view
Knee-jerk answer: Could be. Don't give a shit.
More reasonable answer: According to mainstream macroeconomic theory, the only non-distortionary tax is actually a uniform head tax. So, if that's what you really care about, replace all taxes with a fixed lump-sum tax that everyone pays.
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Its more of a thorny problem to solve then it first appears.
Imagine you live in a hypothetical town that had no property taxes, and instead simply divided the annual budget equally among citizens. So a $50M budget and 5000 citizens results in a $10K yearly tax per person.
However this opens up more questions then it solves....if you own .15 acres of land and I own 100,000 acres of land are we equally using the same ratio of town services?
Perhaps the "right answer" would be to have a much more narrow definition of "town services" and have everything else pay-per-use (ie. pay for police protection, pay for fire protection, etc)
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My point isn't that a head tax is the "right" form of taxation. It's that it is considered the least distortionary.
I think it's clear that it's a particularly bad form of taxation, actually, and it should make the other person acknowledge that distortion isn't really what they care most about.
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