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Economy / Taxes

I’m Sorry I Ruined Dave’s Vacation :)

By Justin Hauke on Apr 7, 2008

I will quickly respond to David’s post.

Like David, I’ve stated my support for protecting homeowners from spurious appraisal increases. I definitely believe that this is a problem. But I cannot defend Dave’s protectionist sentiment. Property tax rates should be set at a flat rate, dependent upon the fair value of the home, and not a flat nominal amount that is independent of home value. David is basically advocating that new homeowners should subsidize existing homeowners, whose property taxes are fixed at the rate at which they originally purchased their home. So homeowners like David are grandfathered into a nice little tax haven with this legislation.

Here are some hypothetical tax issues David might also support, based on his logic.

A 20-year-old pays $1,000 in income taxes on his $20,000 salary in 2008. Therefore, he should pay $1,000 in income taxes in 2030, even though he is then making more than $500,000 per year.

A woman bought a personal computer in 1985 for $5,000, paying $500 in sales taxes. So she should pay $500 in sales taxes on the computer that she bought this year for $800.

You can see how this makes little sense for other forms of taxation. I have no problem with indexing property values to inflation or another metric so that only real appraisal gains are taxed. But in my opinion, David’s idea is not a fair solution in general. Regardless of whether property assessments were intended to lead to tax increases, it doesn’t mean that they shouldn’t.

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Justin Hauke

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