Why property tax should be abolished, Part 1

Adam SmithI have been asked why I am opposed to property tax. The reasons are so many that it will take more than one post. However, I can sum it all up in a single sentence. They are unjust and their injustice injures individuals as well as communities and ultimately undermines the wealth and strength of our State and Nation.

Adam Smith, in 1776, gave us four maxims of just taxation. How does Indiana’s property tax stand up to Adam Smith’s maxims1? Consider the matter for yourself.

1. The subject of every State ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the State.

Indiana Property Tax has no relationship to the ability to pay. Homesteads are assessed for reasons totally unrelated to revenue. Homes do not generate revenue they are an expense. Some business property is assessed based on a theoretical revenue it generates. Most business property however is assessed for reasons other than the revenue it generates.

2. The tax each individual is bound to pay ought to be certain, and not arbitrary. The time of payment, the manner of payment, and the quantity to be paid, ought all to be clear and plain to the contributor, and to ever other person.

Indiana property tax is uncertain, unpredictable, and arbitrary. Property tax is defended because of the security it provides to local government budgets, but this has been done at the cost of destabilizing family budgets.

3. Every tax ought to be levied at the time, or in the manner in which it is most likely to be convenient for the contributor to pay it.

Lately, Indiana tax bills have been erratic and unpredictable.

4. Every tax ought to be so contrived as both to take out and to keep out of the pockets of the people as little as possible, over and above what it brings into the public treasury of the State.

Property Tax is expensive to administer v. sales and income tax. It taxes capital rather than income. Taxing your home is taxing what Adam Smith called a “necessary.” No necessary should be taxed because it was necessary to live. It is like demanding a percentage of your savings account, or a piece of your clothing, or a share of the cornbread on your plate. As practiced in Indiana, it taxes wealth you don’t even have because it taxes unrealized capital gain.

In following posts we will see how the injustice plays out in the real effects it has on people and communities.

1. These maxims come from Adam Smith’s seminal work, The Wealth of Nations, published in 1776. It remains a primary text for every student of economics. Smith was deeply concerned about ethics in economics and previously published a work on social ethics entitled The Theory of Moral Sentiments.

Advertisements

3 Responses to “Why property tax should be abolished, Part 1”

  1. Tom Humes Says:

    Nice Site layout. Keep up the good work. Looking forward to reading more from you.

    Tom Humes

  2. kenmorgan Says:

    Thanks Tom. Feed back improves performance. I like to listen.

  3. Joshua Kwentoh Says:

    Good info. Keep it up.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: