Magnificently Right

Here’s why the Tea Party is:

Republican consultants report that in focus groups, TV commercials about out-of-control debt prompt strongly positive responses even from Democrats. Even Democrats have to live somewhere and a lot of them own homes. And there are a lot more Democratic taxpayers and homeowners than there are government workers. This is a wedge issue for Republicans that won’t quit.

Here’s one result that I found remarkable: It shows the aggregate property taxes paid to state and local governments, against aggregate mortgage payments (the outstanding volume of mortgage debt multiplied by the current mortgage rate). The result is somewhat exaggerated, because about a third of property tax collections are commercial rather than residential, but it’s still compelling: the property tax burden on homeowners is now roughly equivalent to the interest burden on their mortgages!

When one gets to that point, one is no longer a home owner, but simply renting their home from their local government. That’s the way it feels here in CA. Our mortgage is still more than taxes, but not by all that much.

15 thoughts on “Magnificently Right

    1. JD

      Agreed. The idea that I must keep paying the government for the privilege of owning what is mine is absurd at best. As with all big-state nonsense it’s done for the children – public schools get funded off of the government stiffing me for the value of my home. A pox on every fool who keeps such schemes going.

    2. Eric Weder

      I agree – don’t pay your taxes and they will sell your property at auction. As Rand said, that means you are really just renting from the local government.

      Fortunately where I live, property taxes are about 10% of the mortgage payment.

    3. Peterh

      Property taxes to pay for police and fire departments, protecting the taxed property, makes some sense. But even these are a threat to property rights if real estate prices go crazy. Property taxes to pay for social program wealth transfers should be criminal. I hold the latter spending largely responsible for the wide spread government budget problems today.

    4. roystgnr

      Does this apply to all taxes, or just property for some reason? Paying for owning things doesn’t seem especially more ridiculous than paying for buying and selling things, paying for trading things, paying for earning, or paying extra for trading things with somebody who lives far away.

      The unintended consequences of property taxes do have their own unique flavor, I admit. For instance, we don’t send all our kids to private schools in the US, we send them to “public schools”, which are like private schools in that they’re segregated by tuition, but which are unlike private schools in that the expensive ones’ tuition also has to be high enough to pay for an expensive home bundled into the price.

  1. Curt Thomson

    With Prop 13 California actually is in the middle of the pack in terms of average rate. Much lower than Texas or New Hampshire (states with no income tax). It’s mostly for schools, which means the endless “it’s for the children”.

    In related news, North Dakota is actually voting on eliminating them entirely.

    1. Alex

      Re: Prop taxes

      This is specifically why I never donate to our local schools or support their fundraisers or whatever. I already donate every year in the form of prop taxes.

  2. Alex

    One of the great things to come out of the Tea Party during its sloppy, wild, democratic (small D) rise, is that it’s slowly forcing “social” issues to the backburner. The less time we or our politicians have to spend debating morality and sexuality in the public sphere, the better.

  3. Curt Thomson

    Looking at some lists, my favorite has to be Nebraska. 3rd highest property tax rate in the country, and an income tax added on top. I guess I can see their point. What with their wonderful winter weather and all those lovely beaches, who wouldn’t be willing to pay a 3% property tax on their house?

  4. Leland

    I’m not sure I agree with Wodun that property taxes be illegal. They certainly have a way of being abused, and I don’t think taxing entities had any problem with the artificial raise in property values. Still, if controlled, property taxes are just one form of taxation over another. In more rural settings, I think they make a good deal of sense.

    Please though, don’t confuse my argument above as a preference to property taxes over other forms of taxation.

  5. David

    Rand, just wait until you’ve paid off your mortgage, and then look ahead to an indefinite future of property taxes, every year bigger than the year before, with no way to get ahead.

  6. Karl Hallowell

    As to this discussion of property taxes, I’d rather have them than have income taxes. Among other things, it would help discourage the incentive to boost short term GDP at the expense of long term prosperity. And the tax consequences of inflation would be pretty much eliminated.

  7. wappledoo

    I’d be okay with property taxes if there were a law against taking away a primary residence due to property tax delinquency. That way, someone can live out their years on their property if they can’t afford taxes. Then, before the property can change hands (inheritance or sale), taxes must be paid. That would be a fair enough system.

    That said, I still hate property taxes more than other taxes. At least income tax is coming off of cash flow, so it’s just diverting some of that cash flow into the government’s coffers. There’s no guarantee that someone has cash flow just because they own property.

    1. wodun

      This ^^

      It would be nice if people who are retired and no longer working don’t have to sell the house they have lived in for 30 years because of property taxes.

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