by Jeffrey Tucker via The Epoch Times,
Governor Ron DeSantis of Florida has an absolutely thrilling idea, one I never imagined I would see unfold in my lifetime. He is putting on the ballot next year a referendum that would abolish or restrict local governments from taxing owner-occupied homes.
That’s right, he wants to get rid of the property tax, saving residents some $3,400 a year and fundamentally disrupting the way schools and local governments are financed.
Texas is considering the same path.
If this really happens, I can easily predict more of a demographic shift out of the Northeast and Northwest to the South and Texas. If this spreads to more states, it would amount to a revolution in public finance.
It’s long overdue. These tax schemes are brutal on home ownership. Indeed, it’s hard to say that you are ever really the owner of your home if you are having to pay rent to the government every year.
It’s especially a problem in an environment when the home valuation goes up every year and so does the tax you owe on the place. You have done nothing but lived there and enjoyed life. It is entirely paid off. Meanwhile, the government keeps coming after you with ever more pressing demands for money.
You cannot really say you are an owner of anything under these conditions. Of course when I hear about how this will save $3,400 on average in Florida, I nearly faint. In my area of the country, this would be pennies. Property taxes in New England can be $20K–40K and that is not unusual.
These taxes fund schools that people don’t use. That’s how public schooling in this country came to be financed. The system of school districts really is a system of tax districts. That’s why they are so heavily enforced. Live on this side of the street instead of that one and your taxes can be completely different. It’s all to fund the public schools, whether you use them or not.
Friends of mine are paying $30K in property taxes plus $70K per kid for private schools for three kids.
If that kind of expenditure shocks and amazes you, you are not alone. I find it all unfathomable but that’s how New England works.
It’s a different world in Texas and Florida. Here you have new experiments in school choice. The plans are different but they generally let the parent use the money that would otherwise go to the public school for private schools, charter schools, or homeschools, either in the form of direct payments or deductions from the tax bill overall.
We might ask how all of this is happening now. The answer traces to the school closures of 2020 and 2021 which dramatically reduced confidence in the public schooling system and hence the way they are financed. If millions of people are homeschooling and millions more are attending newly established private schools, the political pressure for ever-higher property taxes is thereby reduced.
It is not thus an accident that we are seeing these dramatic changes being proposed in how schools are financed given that the public schools that rely on income taxes are being depleted of students and teachers. Schools are closing all over the country all the time. With ever fewer schools to finance, it makes perfect sense that people would start asking profound questions about the property tax system too.
There is an additional factor. Public schools in all countries depend on a degree of population consensus on basics like language, norms, demographics, and notions about goals and methods. What parents discovered in lockdowns is that this did not exist. They were feeding their children to a system that teaches in a way contrary to their own homelife and sometimes even endangering their children with creepy views on gender and sexuality.
This was really a turning point. Once public doubts rose to a tipping point, the consensus collapsed and so did the willingness to continue paying for them.
In Northern states, it will be a long time for such reforms to arrive. Many cities are stuck in a Catch-22 situation. Their property taxes are too high to attract residents. At the same time, their underperforming schools are voracious in their consumption of tax dollars. It is not likely that the schools will get better with less revenue so that leaves cities with a huge problem. They have no way to attract residents and business investment, so they keep threading the needle to preserve the status quo, as bad as it is.
That’s why the only real path for reform for these Northern cities is a dramatic deregulation of schooling itself. There needs to be more innovation to draw people out of public schools into homeschools, charter schools, and private schools. With this, there needs to be an elimination of all vaccine mandates such as they are also doing in Florida. That way states like Connecticut, Massachusetts, Rhode Island, and New York can become centers of educational freedom.
This change would allow them to start experimenting with lower taxes to attract residents and capital. Maybe at some point, governors can consider what DeSantis is doing, proposing to abolish property taxes entirely. Yes, that would increase home values but it would also untie home valuations from school districts. That would be a dramatically different way of financing local government but something needs to change. They cannot be stuck in this fiscal trap forever.
That aside, if this proposition goes through in Florida, there would be ever more reason for people to move and live in this great state. And it would serve as a model of other states. It would imply huge changes in educational funding and also in the general trajectory of public finance in this country.
A healthy state and local economy should not have to depend on property taxes. They are always and everywhere unAmerican. In America, people are supposed to be able to own things outright, as in “This is my house.” So long as government is dinging you every year with ever higher charges, you simply cannot say that.
Taxation is ultimately the use of force. If you don’t pay, government can take what is yours and can convict you of a crime. For that reason, taxation should only be used when there is no other option and the thing it funds cannot be otherwise provided through market means. This is also a compassionate strategy for public management. Knowing the difference between mine and thine is a foundational principle of civilization. In that way, DeSantis is proposing to make his state a much more civilized place to live and invest.
https://www.zerohedge.com/personal-finance/property-taxes-are-theft
