[scarmig]

Two points:

1) Someone's getting taxed, somewhere. The question is what we want to incentivize.

Working hard for a living? Saving money and investing it to grow the economy? Purchasing food to feed and garments to clothe your family? Trading with people outside the country who make things more efficiently than you can?

Or sitting on underutilized land?

No matter what, someone's ox gets gored. The key is that it should be oriented around good public policy, and that people should have the time to incorporate policy changes into their decision making process.

2) You seem unrealistically worried about government coming in and removing people from houses they own at gunpoint. The actual worst case scenario is someone gets a reverse mortgage from the bank to pay property tax with equity from the home, and they end up bequeathing a smaller proportion of wealth to their heirs when they pass.

[ImSkeptical]

>The question is what we want to incentivize.

I disagree with this. This idea is based on the implicit assumption that the purpose of taxation is to change behavior.

As I alluded to earlier, I think the purpose of property tax is to help fund the local government. We need waste disposal, food inspectors, schools, police, fire department, etc. These things are, in part, funded by property taxes.

If people value my house at a greater rate, that doesn't change the amount of education local kids need, I don't get better police protection, and the amount of government services don't necessarily increase. Why am I paying more in property taxes then?

>You seem unrealistically worried about government coming in and removing people from houses they own at gunpoint

My main concern is the idea that we would use property taxes as a tool for taking people's property.

[cellularmitosis]

    My main concern is the idea that we would use property taxes as a tool for taking people's property.

If I buy a wrench, it is mine, outright, forever. Owning a home isn't like that. You only get to keep the home for as long as you can afford to pay the property taxes. there are different meanings of the phrase "property ownership". I think the misunderstanding here is that you are applying the expectations of the wrench kind of property ownership to the housing kind of property ownership.

Maybe a thought experiment is useful. Imagine owning a car, where at any point in time, the market can decide to magically upgrade your car to a high-end luxury sports car. On the one hand, your car is now much more valuable, but on the other hand, gas and insurance rates just exploded, and you may no longer be able to afford the car anymore. Home ownership is less like owning a wrench, and more like owning a magical transforming car.

[ImSkeptical]

If I was applying the expectations of the wrench kind of ownership, then I would be arguing that property taxes should not exist. That's not what I wrote in the comments above. In fact, I specifically articulated the reason why property taxes exist - to pay for the services of local government.

Instead, I am arguing that property taxes should change based on their reason for existence, funding the local government, and not be used as a tool to deprive people of the ownership of their property.

For example: A storm blows over a big tree, which severely damages the local elementary school. The school has been underperforming anyway so we need to hire new teachers and outfit the classrooms with better technology. All of this means the school needs more money. Local government officials decide that this may be funded by an increase on property tax. This is the reason that property taxes exist, so the argument to raise it here may be good, even if the value of my property hasn't changed.

As a different example: A big tech company comes to town and hires many thousands of workers. The high paid tech workers want houses in town, and the additional demand drives up house prices. Why should I pay more taxes? People with more money may want my house, and they are free to offer me their money. Using their demand for housing to justify asking me to pay more money or lose my property is unreasonable and unethical. This is what I'm arguing should not be done.

[cellularmitosis]

I'm trying to envision the details and consequences of the alternative system of property taxes which you have in mind.

Are you suggesting a system where adjustments to property taxes only happen each time property is sold (i.e. when speculation of a property's change in value becomes real)?

Or are you suggesting a property tax system driven by need, rather than based on the value of the land? The neighborhood needs a new school, so everyone's property taxes are up that year?

The part of your argument which I agree is a bummer is the variability and unpredictability of property taxes, and how that disrupts one's ability to plan and set up something permanent (i.e., retire to a workshop out in the woods -- a sudden increase in value would force you to pack up shop and sell).

However, while I agree its a bummer, I disagree with your unreasonable and unethical angle. Imagine a neighborhood where someone bought a house for $50k in the 1980's, and it is now worth $2 million. Should he still be paying property taxes based on the $50k sale value? How is it reasonable or ethical that the owner of that house should get away with paying a tiny, tiny fraction of the property taxes which his neighbors (who just bought the place next door for $2 million) are paying?

Edit: I think what I'm saying is that any alternative system I can imagine is only going to encourage dynasties -- you live in the house your ancestors bought in the 1800's because it allows you to pay $10/yr in property taxes. Same goes for businesses -- stubborn mom-and-pop shops just barely staying afloat downtown could prevent skyscrapers from being built, etc.

[ThrowawayR2]

> The actual worst case scenario is someone gets a reverse mortgage from the bank to pay property tax with equity from the home, and they end up bequeathing a smaller proportion of wealth to their heirs when they pass.

In other words, a permanent and widespread subsidy that enriches the banking industry at the expense of the public. Don't we have enough of those already?

[scarmig]

I'm confused how you'd consider reverse mortgages a subsidy.

[ThrowawayR2]

How could one not? See https://www.consumerfinance.gov/ask-cfpb/what-are-the-costs-...

Reverse mortgages don't happen for free. The interest and all those fees go to the banking & other industries. By making reverse mortgages a considerably more frequent scenario, those industries clearly benefit.