Challenging the Conventional Wisdom on the Property Tax
The property tax has many fans among academics, particularly economists, who view the property tax as an appropriate and feasible source of local revenue. But the future role of the property tax in government finance systems around the world is unclear. It remains unpopular among voters and politicians, and has been subject to assessment limits, rollbacks, and even elimination across the U.S.; overseas, the low rate of property tax collections is an issue in many OECD countries, and the property tax remains a weak revenue source in developing countries.
The property tax could, however, be improved in reputation and practice with key policy and administrative reforms, according to Challenging the Conventional Wisdom on the Property Tax, edited by Roy Bahl, Jorge Martinez-Vazquez, and Joan Youngman, which suggests ways to achieve greater voter confidence and more robust property tax systems in both developed and developing countries.
Property tax systems were the subject of a 2008 conference, “What Role for the Property Tax?” that compared theories with practice and was the basis for the volume. Key topics include how the property tax compares with other taxes in terms of efficiency; the political economy of property taxation and land taxation; behavioral responses to the property tax in terms of location choice or land use; tax bases and the fairness of a market-value tax base; taxing property transactions versus ownership; taxing rental versus capital value; the optimal revaluation policy; and the assignments of revenues and functions for property taxes.
The book addresses the reason for the poor state of affairs in practice, and explores issues in re-appraisal, horizontal equity, the “visibility” of the property tax, and how the property tax compares with alternatives, such as the sales tax or a transfer tax imposed when a property is sold.