FWIW, I, an utter amateur, offer a couple of thoughts:
* Consumption taxes seem to me to be income taxes but limited to stores. Both are nosy as hell to detect evasion. Thus limits on yard sales, monitoring flea markets, worries about barter such as roof work for dental work, online income such as etsy and eBay, and so on.
* Property taxes have one feature I have never seen mentioned, possibly because it doesn't matter now and probably never will: they can be paid anonymously, and the government need not know who owns parcels. All that matters is whether the tax is paid, not who paid it. If it's not paid, they know where the parcel is, and can leave notes, send in the usual SWAT team, whatever the courts will let them get away with, and eventually confiscate the parcel.
A lot of people favor consumption taxes and sneer at property taxes as a wealth tax. I don't buy that; all taxes are paid by people, and property taxes have about as low overhead as is possible, especially in comparison to income and consumption taxes.
Others deride property taxes as paying rent. But that rental aspect matters only because have given themselves priority in collecting property tax debt by confiscating the entire property and selling it no matter how small the tax debt is. These same people holler and scream at any mention of doing away with zoning, which is as bald a control grab as there can be. As long as government can control your land usage, yes, you are paying rent, you do not own that land.
The problem I have with property taxes is that the value they are taxing is not and cannot be validated by a third party. A consumption tax taxes the value I and another person agreed upon outside the relevant tax, but property tax taxes the value someone assigns to the property whether I like it or not. No need to raise tax rates, just bump up assessments and call it a day.
I don't like the idea that I rent my property from the state (be it land or a car) and I don't like zoning laws either, for what that's worth.
Yes, property tax is a mild wealth tax whose value is unknown in detail until it sells, but house prices aren't as volatile as stocks or as rare as art, jewelry, etc. There are several ways to solve the value problem. Simplest is self-assessment, with many ways to prevent fraud.
* Don't allow insurance to cover more than the self-assessed value. More to the point, allow insurance companies to restrict payout to the self-assessed value.
* If it sells for more than the self-assessed value, call that fraud and owe lots of back taxes; prorate the differences going back to the purchase prices and owe the extra taxes with interest.
* Do the same for lower selling prices. Pro-rate the differences going back to the purchase price and refund the tax differences with interest.
* Make self-assessed values public, with a bounty for the seller showing it is not what was paid for it. Sell a house for $500K, buyer says $400K. Seller gets $100K bounty and government collects the new tax rate plus penalties.
Self-assessment could be a pain, but it shouldn't be impossible, and exceptions can be made for coming close. The cheats will be sellers and buyers lying about the purchase prices and decades=long owners who don't really know how the price is changing. There are ways around that too.
Before my insurance dropped me (California!) and I had to switch to the state FAIR plan, the insurance company always offered new assessments every renewal. That should be good enough to qualify as a good faith effort.
I agree that self assessment isn't a bad way to go. However, the ways you describe to avoid fraud still have big issues:
1: Insurance can't cover more than the self-assessed value. That's fine for a single thing, but if my insurance covers the contents of the thing it won't work. If I am taxed on my car's value but insurance is allowed to cover the contents of my car I have car insurance plus a rider for 20k$ of contents or whatever it takes. If it is house insurance I have insurance for all my expensive stuff inside that is also highly flammable. Very easy to get around, and insurance companies want to get around it.
2: What's the cut off on self assessed value assessment? If I plan to sell, can I just re-assess the week before? The month before? A whole year? How was I supposed to know that some AI company wants to pay me 5x the property value to build a data center? What if housing prices go up in an area for a few years then die back down to lower levels? How does that affect retrospective taxes?
Courts would rip that to shreds.
3: Bounty on assessment fraud. What happens when the value of the property drops? You buy a house for $500k then find out it has bad foundations and would only resell for $400k? Or there is a flood that destroys the barn, is that ok?
All that said, I am still much more in favor of self assessed (or insurance self assessed) property values than government assessed. I just prefer consumption taxes to property taxes. I dislike wealth taxes in general, and property taxes always seem like a backdoor way of kicking people off their property so someone else doesn't have to pay full asking price for it.
Yes, VASTLY less troublesome than income tax evasion. Consumption tax evasion I am not so sure about. Maybe I am just more willing to overlook consumption/sales tax evasion as being teeny tiny drops in the bucket, but it seems like that is practically self enforcing in so far as buyers and sellers are tracking their sales and using anything other than cash or crypto.
FWIW, I, an utter amateur, offer a couple of thoughts:
* Consumption taxes seem to me to be income taxes but limited to stores. Both are nosy as hell to detect evasion. Thus limits on yard sales, monitoring flea markets, worries about barter such as roof work for dental work, online income such as etsy and eBay, and so on.
* Property taxes have one feature I have never seen mentioned, possibly because it doesn't matter now and probably never will: they can be paid anonymously, and the government need not know who owns parcels. All that matters is whether the tax is paid, not who paid it. If it's not paid, they know where the parcel is, and can leave notes, send in the usual SWAT team, whatever the courts will let them get away with, and eventually confiscate the parcel.
A lot of people favor consumption taxes and sneer at property taxes as a wealth tax. I don't buy that; all taxes are paid by people, and property taxes have about as low overhead as is possible, especially in comparison to income and consumption taxes.
Others deride property taxes as paying rent. But that rental aspect matters only because have given themselves priority in collecting property tax debt by confiscating the entire property and selling it no matter how small the tax debt is. These same people holler and scream at any mention of doing away with zoning, which is as bald a control grab as there can be. As long as government can control your land usage, yes, you are paying rent, you do not own that land.
The problem I have with property taxes is that the value they are taxing is not and cannot be validated by a third party. A consumption tax taxes the value I and another person agreed upon outside the relevant tax, but property tax taxes the value someone assigns to the property whether I like it or not. No need to raise tax rates, just bump up assessments and call it a day.
I don't like the idea that I rent my property from the state (be it land or a car) and I don't like zoning laws either, for what that's worth.
Yes, property tax is a mild wealth tax whose value is unknown in detail until it sells, but house prices aren't as volatile as stocks or as rare as art, jewelry, etc. There are several ways to solve the value problem. Simplest is self-assessment, with many ways to prevent fraud.
* Don't allow insurance to cover more than the self-assessed value. More to the point, allow insurance companies to restrict payout to the self-assessed value.
* If it sells for more than the self-assessed value, call that fraud and owe lots of back taxes; prorate the differences going back to the purchase prices and owe the extra taxes with interest.
* Do the same for lower selling prices. Pro-rate the differences going back to the purchase price and refund the tax differences with interest.
* Make self-assessed values public, with a bounty for the seller showing it is not what was paid for it. Sell a house for $500K, buyer says $400K. Seller gets $100K bounty and government collects the new tax rate plus penalties.
Self-assessment could be a pain, but it shouldn't be impossible, and exceptions can be made for coming close. The cheats will be sellers and buyers lying about the purchase prices and decades=long owners who don't really know how the price is changing. There are ways around that too.
Before my insurance dropped me (California!) and I had to switch to the state FAIR plan, the insurance company always offered new assessments every renewal. That should be good enough to qualify as a good faith effort.
I agree that self assessment isn't a bad way to go. However, the ways you describe to avoid fraud still have big issues:
1: Insurance can't cover more than the self-assessed value. That's fine for a single thing, but if my insurance covers the contents of the thing it won't work. If I am taxed on my car's value but insurance is allowed to cover the contents of my car I have car insurance plus a rider for 20k$ of contents or whatever it takes. If it is house insurance I have insurance for all my expensive stuff inside that is also highly flammable. Very easy to get around, and insurance companies want to get around it.
2: What's the cut off on self assessed value assessment? If I plan to sell, can I just re-assess the week before? The month before? A whole year? How was I supposed to know that some AI company wants to pay me 5x the property value to build a data center? What if housing prices go up in an area for a few years then die back down to lower levels? How does that affect retrospective taxes?
Courts would rip that to shreds.
3: Bounty on assessment fraud. What happens when the value of the property drops? You buy a house for $500k then find out it has bad foundations and would only resell for $400k? Or there is a flood that destroys the barn, is that ok?
All that said, I am still much more in favor of self assessed (or insurance self assessed) property values than government assessed. I just prefer consumption taxes to property taxes. I dislike wealth taxes in general, and property taxes always seem like a backdoor way of kicking people off their property so someone else doesn't have to pay full asking price for it.
Those problems seem minor to me, in comparison to all the snooping required to deter and detect income and consumption tax evasion.
Yes, VASTLY less troublesome than income tax evasion. Consumption tax evasion I am not so sure about. Maybe I am just more willing to overlook consumption/sales tax evasion as being teeny tiny drops in the bucket, but it seems like that is practically self enforcing in so far as buyers and sellers are tracking their sales and using anything other than cash or crypto.
No, only consumption taxes:
https://thomaslhutcheson.substack.com/p/cash-flow-tax-to-consumption-tax