Anyone with a mortgage pays property tax monthly. PITI as the total mortgage payment is called includes taxes (it is the T). Mortgage lenders understandably don't want the government confiscating their property because of a failure to pay by a third party so they collect and escrow the money necessary. Sales tax is close to proportional if food and meds are excluded as they are in most places. Smith, Ricardo and Mill lived in a time and place where land was owned by the remaining members of the fuedal aristocracy. I would be startled if Lind didn't know all of these things so I have to assume this is another attempt to expropriate the Boomers without saying the word.
Actually progressives in liberal areas wanted and want to maintain Salt deductions. President Trump wanted to limit them. He probably lost the Biden election because of Salt deductions. The old money class are now the progressive democrats in the Northeast, Illinois, and California.
Trump lost all those high tax blue states, which were never competitive to begin with. High taxes are an irresistable invitation to corruption for state politicians. Blue states take it to another level.
My wife and I are 70, I'm disabled, and the majority of our income is from Social Security.
We moved to our current location from another state in 2017 and purchased a home. Since 2017 the assessed value of our home has more than doubled, which doubled our property tax. Additionally the tax levy has increased every year, adding to the total tax.
The increase in value will result in a nice gain when we eventually sell. Between today and the day we sell it's a different story. Our home and the land it sits on are non-fungible assets. I can't slice off a portion of my home to pay the tax. All available methods to access equity incur expenses (refi, HELOC) meaning that I would need to spend money to have money to pay taxes. Perhaps a credit card???
Bottom line, the value of the assets have increased, along with the property tax. Unfortunately the asset is my home and produces no income until sale. Needless to say, the increase in tax is significantly higher than the Social Security COLA. THIS is the squeeze that resulted in Howard Jarvis and Prop 13.
With wage growth basically stagnant vs inflation it's not just us Boomers who find ourselves in this position. My younger working neighbors see property tax requiring a larger percentage of their income every year.
The reality of property tax on a personal residence is highly regressive and hits those least able to afford the increases. It has the effect of making a home even more difficult to afford and at the current rate of increase will result in homeowners in my area being forced to sell their home to pay taxes. Once you are out of the game as a homeowner, reentry is next to impossible.
Retired, working class, home owners with fixed incomes struggle to pay their property taxes, regardless of the fact that they may live in a prosperous community with rapidly increasing home values.
That would be me.
If the assessed value of a home is fixed at its sales price, this insures that those with the ability to pay higher property taxes do so because it is factored into the sales price.
Rental property should be taxed on the basis of the income it generates. If a landlord is investing in a property and charging reasonable rents, their income is low, and vice versa.
The best way to tax is broad and shallow. So trying to shift more onto property taxes is about as bad as trying to shift more onto income, or capital gains taxes. That before you get into the regressive nature of property taxes as we currently do them. An example is the homestead exemption. You have to have some assets to own a home. So the people that own homes get a discount on their taxes while the renters, who have fewer assets get to pay full freight.
Oh, and you might add the landlords don't pay the taxes anyway. It's like when the progressives and liberals shout for higher corporate income taxes. Well then the corporation just add that to the purchase price. The actual landlords will simply pass the tax onto the renters. Don't get me wrong, I'm not advocating for repealing property taxes, but like most arguments for higher taxes, the problem is usually a spending issue, not a tax issue.
I would also point out that other then in farming, just about no one is renting the land. And the guy that was bragging about how easy it was to be a landlord should be trusted about as much as a guy telling you to open a car dealership and watch the money come through the door. I'm in home repair and remodel business and have met plenty of landlords that were losing money.
I even joke about how becoming a landlord is the most common accidental business. People buy a new home and then start renting out their old one with out learning all the rules. Worse is when someone inherited the parents old house out of town and thinks they can be an absentee landlord. For the most part, the property rental industry is like most other industries. Those that try to over charge get driving out of business.
In most states, at least for one’s primary “homestead,” property taxes are integrated into one’s mortgage payment through the escrow. That means that not only are property taxes paid in twelve increments, but the magnitude is also hidden. Perhaps I’m missing some nuance to your argument, but shouldn’t this make property taxes more popular?
Depends where you live. The mortgage isn't going to change but that property tax is going to change. People pay their mortgage monthly; payroll deducts their other taxes at a state and federal level. This is basic stuff dude.
You didn’t understand his point. If you have a mortgage the bank probably pays the taxes through the escrow. You pay 12 monthly payments, so by your logic property taxes should be more popular with those people than with people who do not have mortgages and thus pay property taxes once or twice a year.
Horrible idea. At least in blue states like NY, you can own your home outright and still have to pay $6,000 a year on a modest house paid twice a year (school taxes being paid separately). Making them even higher on purpose is not going to happen.
This article myopically discusses real estate investment as if there were no risk. Nothing could be further from the truth. Deamonizing anyone who owns property as a parasite is small minded and vindictive.
Michael Lind is one of the best writers out there on his chosen topics. Thanks!
I'm a bit unclear about this tax--he uses the terms land tax and property tax, both. And, it seems the readers in this forum are also unclear about this.
A land tax recovers the appreciation attributed to the community, of the value of land. While a property tax would penalize those who invest in value-additions such as houses and renovations, because it taxes both the land and the properties on it.
A land tax would incentivize, rather than tax, more building, thus driving rents down and still giving revenue to fund communal needs and taxing away unfair gains by the owners of the land. I think that's the idea. Am I correct?
Since the 2008 debacle, Fed policy has caused massive land inflation--I'd estimate 20% per year throughout the US in my own experience.
One thing lacking from this article is real numbers. So I'll use my own state of CA:
CA property tax revenue for 2025 ~ $100B.
CA income tax revenue for 2025 ~ $140B.
Courtesy Prop 13, the property tax rate in CA is 1.1% of value.
Replacing the income tax with a property tax would require raising taxation rates to about 2.5% This would be a large rise, but it wouldn't be insane compared to other states.
I like this idea. My only caveat: raise the homeowner exemption for owner-occupied homes. Once you've purchased a modest home, you should not have to pay for the privilege of living in it. The current CA exemption is $7K -- it's a joke. The exception should be equal to the median home price of the city or county.
Owner-occ housing is about 40% of the tax roll. Let's assume 10% of that is over-median-value, so that means you would be removing about 30% of the tax roll by a much larger homeowner exception. So, making up the same $240B in revenue would require a tax rate of 3.5%. High by CA standards, but not compared to other states (Texas comes to mind.)
Now... replacing the federal income tax with a property tax... that's a lot harder. But still probably doable. According to ChatGPT's math, it would take a national rate (above the state/local one) of about 5% of assessed value.
We do need to somehow pay taxes, agreed, debt is far too huge and we spend more every administration. Real estate is a poor method.
Real estate is not liquid. You buy a cheap house on a piece of land then the yuppies move in and your land is worth a million, can't move, everywhere is expensive.
I'd be ok with a tax on third homes, or properties worth eight figures or higher, but there are many other ways that might be better to tax. Like short term capital gains, I don't think that money is being used productively. I invest in equities because it's a relatively good gamble, not because I think the businesses need it, because they don't. You could also tax my capital gains as income, and extend FICA taxes all the way up to Musk.
Make me king and I'd increase incomes a lot. From my limited experience making payroll and owning a business I know that good employees and investments in one's own business pay off in spades. Avoid taxes by paying employees and buying equipment.
1) Most property taxes are on "improvements", not land.
2) I have observed that the absolute worst governed areas have the highest property taxes. Cities have higher property taxes than suburbs. Blue states have higher property taxes than red states (CA is a weird exception, buts. it's true of the entire Northeast and IL). Corrupt urban political machines love property taxes because its harder to move property out of the city then people.
What do these property taxes fund? $40k/year/kid in bloated K-12 spending in NY. Corrupt spoils systems in far left rust belt shithole cities.
It's certainly true that property tax relief should focus on young families living in their homes and not old people or second homes.
But in general property taxes are a bad tax. They tax GOOD COMMUNITIES. Property values go up because you build a community people would actually want to live in. We shouldn't punish that.
Federal reserve money printing shenanigans, 'easing' etc, and artificially reduced interest rates are a major cause of home values to skyrocket, thus providing the basis for local govts to sharply raise the property taxes; along with generalized inflation reducing real money available to the property-taxed, whose taxes have more than doubled in the last 12 years in my city in TN. Especially if they are retired, all of this applies in spades. So youre an idiot in my opinion. Amortizing property taxes as a function of GDP is very stupid and meaningless as well. Good job with this essay!
There is a public value, however, to open space, e.g. undeveloped land that is perhaps under-used economically, but is retained as watershed, flood plain, greenbelts and other quasi-public purposes. We certainly don't want to tax those out of existence, which there must be a way to avoid.
“ And to minimize sticker shock, populists and conservatives should support monthly or quarterly rather than annual property tax payments”
Here in Bergen County, NJ (maybe even all of NJ, but I live in Bergen County), property taxes are paid quarterly and I can assure the author that it’s quite noticeable. Monthly would be too, even on my modest, middle class house.
I would guess the visceral pushback to property taxes is more about the desire for sovereignty associated with property ownership than sticker shock. E.g. anti-“you will own nothing and be happy” populism. Exempting owner occupied homes seems like a good solution, but I’d also like to know whether these taxes will actually penalize passive landlording or will just be passed on to renters.
Anyone with a mortgage pays property tax monthly. PITI as the total mortgage payment is called includes taxes (it is the T). Mortgage lenders understandably don't want the government confiscating their property because of a failure to pay by a third party so they collect and escrow the money necessary. Sales tax is close to proportional if food and meds are excluded as they are in most places. Smith, Ricardo and Mill lived in a time and place where land was owned by the remaining members of the fuedal aristocracy. I would be startled if Lind didn't know all of these things so I have to assume this is another attempt to expropriate the Boomers without saying the word.
You might pay your property tax with escrow that certainly isn't everyone with a mortgage.
I suppose there are some really dumb mortgage lenders out there.
Actually progressives in liberal areas wanted and want to maintain Salt deductions. President Trump wanted to limit them. He probably lost the Biden election because of Salt deductions. The old money class are now the progressive democrats in the Northeast, Illinois, and California.
Trump lost all those high tax blue states, which were never competitive to begin with. High taxes are an irresistable invitation to corruption for state politicians. Blue states take it to another level.
Doubt he lost the election for that reason.
My wife and I are 70, I'm disabled, and the majority of our income is from Social Security.
We moved to our current location from another state in 2017 and purchased a home. Since 2017 the assessed value of our home has more than doubled, which doubled our property tax. Additionally the tax levy has increased every year, adding to the total tax.
The increase in value will result in a nice gain when we eventually sell. Between today and the day we sell it's a different story. Our home and the land it sits on are non-fungible assets. I can't slice off a portion of my home to pay the tax. All available methods to access equity incur expenses (refi, HELOC) meaning that I would need to spend money to have money to pay taxes. Perhaps a credit card???
Bottom line, the value of the assets have increased, along with the property tax. Unfortunately the asset is my home and produces no income until sale. Needless to say, the increase in tax is significantly higher than the Social Security COLA. THIS is the squeeze that resulted in Howard Jarvis and Prop 13.
With wage growth basically stagnant vs inflation it's not just us Boomers who find ourselves in this position. My younger working neighbors see property tax requiring a larger percentage of their income every year.
The reality of property tax on a personal residence is highly regressive and hits those least able to afford the increases. It has the effect of making a home even more difficult to afford and at the current rate of increase will result in homeowners in my area being forced to sell their home to pay taxes. Once you are out of the game as a homeowner, reentry is next to impossible.
Other than that, it's a great idea.
Retired, working class, home owners with fixed incomes struggle to pay their property taxes, regardless of the fact that they may live in a prosperous community with rapidly increasing home values.
That would be me.
If the assessed value of a home is fixed at its sales price, this insures that those with the ability to pay higher property taxes do so because it is factored into the sales price.
Rental property should be taxed on the basis of the income it generates. If a landlord is investing in a property and charging reasonable rents, their income is low, and vice versa.
The best way to tax is broad and shallow. So trying to shift more onto property taxes is about as bad as trying to shift more onto income, or capital gains taxes. That before you get into the regressive nature of property taxes as we currently do them. An example is the homestead exemption. You have to have some assets to own a home. So the people that own homes get a discount on their taxes while the renters, who have fewer assets get to pay full freight.
Oh, and you might add the landlords don't pay the taxes anyway. It's like when the progressives and liberals shout for higher corporate income taxes. Well then the corporation just add that to the purchase price. The actual landlords will simply pass the tax onto the renters. Don't get me wrong, I'm not advocating for repealing property taxes, but like most arguments for higher taxes, the problem is usually a spending issue, not a tax issue.
I would also point out that other then in farming, just about no one is renting the land. And the guy that was bragging about how easy it was to be a landlord should be trusted about as much as a guy telling you to open a car dealership and watch the money come through the door. I'm in home repair and remodel business and have met plenty of landlords that were losing money.
I even joke about how becoming a landlord is the most common accidental business. People buy a new home and then start renting out their old one with out learning all the rules. Worse is when someone inherited the parents old house out of town and thinks they can be an absentee landlord. For the most part, the property rental industry is like most other industries. Those that try to over charge get driving out of business.
In most states, at least for one’s primary “homestead,” property taxes are integrated into one’s mortgage payment through the escrow. That means that not only are property taxes paid in twelve increments, but the magnitude is also hidden. Perhaps I’m missing some nuance to your argument, but shouldn’t this make property taxes more popular?
Depends where you live. The mortgage isn't going to change but that property tax is going to change. People pay their mortgage monthly; payroll deducts their other taxes at a state and federal level. This is basic stuff dude.
You didn’t understand his point. If you have a mortgage the bank probably pays the taxes through the escrow. You pay 12 monthly payments, so by your logic property taxes should be more popular with those people than with people who do not have mortgages and thus pay property taxes once or twice a year.
No I understand his point, my point is that people are cattle
Horrible idea. At least in blue states like NY, you can own your home outright and still have to pay $6,000 a year on a modest house paid twice a year (school taxes being paid separately). Making them even higher on purpose is not going to happen.
This article myopically discusses real estate investment as if there were no risk. Nothing could be further from the truth. Deamonizing anyone who owns property as a parasite is small minded and vindictive.
Michael Lind is one of the best writers out there on his chosen topics. Thanks!
I'm a bit unclear about this tax--he uses the terms land tax and property tax, both. And, it seems the readers in this forum are also unclear about this.
A land tax recovers the appreciation attributed to the community, of the value of land. While a property tax would penalize those who invest in value-additions such as houses and renovations, because it taxes both the land and the properties on it.
A land tax would incentivize, rather than tax, more building, thus driving rents down and still giving revenue to fund communal needs and taxing away unfair gains by the owners of the land. I think that's the idea. Am I correct?
Since the 2008 debacle, Fed policy has caused massive land inflation--I'd estimate 20% per year throughout the US in my own experience.
One thing lacking from this article is real numbers. So I'll use my own state of CA:
CA property tax revenue for 2025 ~ $100B.
CA income tax revenue for 2025 ~ $140B.
Courtesy Prop 13, the property tax rate in CA is 1.1% of value.
Replacing the income tax with a property tax would require raising taxation rates to about 2.5% This would be a large rise, but it wouldn't be insane compared to other states.
I like this idea. My only caveat: raise the homeowner exemption for owner-occupied homes. Once you've purchased a modest home, you should not have to pay for the privilege of living in it. The current CA exemption is $7K -- it's a joke. The exception should be equal to the median home price of the city or county.
Owner-occ housing is about 40% of the tax roll. Let's assume 10% of that is over-median-value, so that means you would be removing about 30% of the tax roll by a much larger homeowner exception. So, making up the same $240B in revenue would require a tax rate of 3.5%. High by CA standards, but not compared to other states (Texas comes to mind.)
Now... replacing the federal income tax with a property tax... that's a lot harder. But still probably doable. According to ChatGPT's math, it would take a national rate (above the state/local one) of about 5% of assessed value.
We do need to somehow pay taxes, agreed, debt is far too huge and we spend more every administration. Real estate is a poor method.
Real estate is not liquid. You buy a cheap house on a piece of land then the yuppies move in and your land is worth a million, can't move, everywhere is expensive.
I'd be ok with a tax on third homes, or properties worth eight figures or higher, but there are many other ways that might be better to tax. Like short term capital gains, I don't think that money is being used productively. I invest in equities because it's a relatively good gamble, not because I think the businesses need it, because they don't. You could also tax my capital gains as income, and extend FICA taxes all the way up to Musk.
Make me king and I'd increase incomes a lot. From my limited experience making payroll and owning a business I know that good employees and investments in one's own business pay off in spades. Avoid taxes by paying employees and buying equipment.
1) Most property taxes are on "improvements", not land.
2) I have observed that the absolute worst governed areas have the highest property taxes. Cities have higher property taxes than suburbs. Blue states have higher property taxes than red states (CA is a weird exception, buts. it's true of the entire Northeast and IL). Corrupt urban political machines love property taxes because its harder to move property out of the city then people.
What do these property taxes fund? $40k/year/kid in bloated K-12 spending in NY. Corrupt spoils systems in far left rust belt shithole cities.
It's certainly true that property tax relief should focus on young families living in their homes and not old people or second homes.
But in general property taxes are a bad tax. They tax GOOD COMMUNITIES. Property values go up because you build a community people would actually want to live in. We shouldn't punish that.
Depends on how much land you have and the nature of the land and yeah dude the house is usually worth more
Federal reserve money printing shenanigans, 'easing' etc, and artificially reduced interest rates are a major cause of home values to skyrocket, thus providing the basis for local govts to sharply raise the property taxes; along with generalized inflation reducing real money available to the property-taxed, whose taxes have more than doubled in the last 12 years in my city in TN. Especially if they are retired, all of this applies in spades. So youre an idiot in my opinion. Amortizing property taxes as a function of GDP is very stupid and meaningless as well. Good job with this essay!
There is a public value, however, to open space, e.g. undeveloped land that is perhaps under-used economically, but is retained as watershed, flood plain, greenbelts and other quasi-public purposes. We certainly don't want to tax those out of existence, which there must be a way to avoid.
“ And to minimize sticker shock, populists and conservatives should support monthly or quarterly rather than annual property tax payments”
Here in Bergen County, NJ (maybe even all of NJ, but I live in Bergen County), property taxes are paid quarterly and I can assure the author that it’s quite noticeable. Monthly would be too, even on my modest, middle class house.
I would guess the visceral pushback to property taxes is more about the desire for sovereignty associated with property ownership than sticker shock. E.g. anti-“you will own nothing and be happy” populism. Exempting owner occupied homes seems like a good solution, but I’d also like to know whether these taxes will actually penalize passive landlording or will just be passed on to renters.