A revolt is building across the United States against property taxes. From Florida to North Dakota, states have attempted or are attempting to abolish them. The anger driving this movement comes from two sources.
One is the belief that you are being taxed for living in your house. “Is the property yours or are you just renting from the government?” Florida governor Ron DeSantis asked. “Boiled down to its very essence, fulfilling the promise of personal liberty is impossible if you can’t actually own a piece of real property,” Pennsylvania state Rep. Russ Diamond argues.
The second driving force is that property tax burdens are often tied to the notional market value of an asset—your house—rather than to the owner’s ability to pay or the cost of providing the services the tax finances. They function like a wealth tax, which isn’t good. “Seniors on Social Security in 2025 received a 2.5% cost of living adjustment,” a Minnesota resident notes“yet my city property tax increased by 10% and 48% over the past five years.”
The first of these points is based on a misapprehension (albeit an understandable one, given the second point).
Property taxes are payments for locally provided and consumed goods and services.
Property taxes are not a fee for living in your house, but a payment for locally provided and consumed goods and services, like schools, police, parks, the fire department, etc. If advocates of property tax abolition are willing to forego these goods and services, then there is no problem. But few of them are. The question then becomes: how will these goods and services be paid for?
The ideal is to charge for a local park the same way we would a water park, or the fire department, the same way we would pest control. But “public goods” – though less ubiquitous than often claimed – do exist, so simply paying for services isn’t always possible. A squad car cruising the street deters criminals from burgling number 48 and number 50 (it is “nonrivalrous,” in the jargon), whether number 48 pays for it or not (it is “nonexcludable”)—and whether they are still paying their mortgage or not. In these cases, if you want the locally provided and consumed service, you must pay for it somehow.
Local service fee burdens should be based on the cost of their provision
The payment method commonly used for locally provided and consumed goods and services is commonly called “property taxes,” and they are frequently driven by the value of your house. So the above misconceptions about property taxes are understandable. If we deal with these misconceptions and genuine problems with property taxes, we can construct something fairer that might garner more support, or at least tolerance.
As a first step towards reforming the system of paying for locally provided and consumed goods and services, they ought to be renamed. When Margaret Thatcher abolished the “rates” system – which was essentially a property tax – she called its replacement the Community Charge. While this was hugely controversial in its application, it was an accurate reflection of what the payment actually was.
A second step would be to break the link between changes in the burden of these payments and changes in the notional value of the payer’s property. The burden should change as the cost of providing the goods and services changes. A local Taxpayer’s Bill of Rights (TABOR)which limits the growth of government spending to something like the growth rate of inflation plus population, for example, would help contain Community Charge burdens by containing local government spending.
Finally, once the cost of these locally provided and consumed goods and services has been determined, there are a number of ways to apportion it between taxable units. One, closest to the current system, would be to allocate it according to each unit’s share of the total property value in the locality. Another, Thatcher’s idea, sought to approximate a private sector fee as closely as possible by apportioning the cost by the number of people in each unit.
Some taxes are better than others
Most people who want to abolish the property tax want to keep the locally provided and consumed goods and services that these taxes finance. There are several proposals for how to finance them, ranging from handouts from state governments to levies on migrants’ wires to foreign countries. While those pushing these schemes often present as “conservative” because they are pushing to abolish a tax, unless they are also pushing to abolish the spending, they are, in reality, merely seeking that free lunch which a wise man told us does not exist.
There are notably few takers among the abolitionist ranks for the hefty sales tax hikes that could fill the gap. Those who consume goods and services, as far as possible, ought to be those who pay for them.
