An argument that property taxes are intrinsically unjust
December 18, 2012 § 14 Comments
A comment by reader tz2026 got me thinking about taxation in the context of our discussions about usury. I’ve long had an intuition that there was something not quite right about property taxes. I’ve on occasion been known to suggest a “mandatory sale” rule: if the property tax assessor values a house at X the property owner should be able to say “OK, you now own it for X” and walk away with the money.
As a provisional exploratory matter, I now think I may be developing an argument that property taxes are intrinsically unjust.
In a profitable loan broadly and colloquially construed, the lender charges the borrower rent for the use of something. In a case of usury the rent is charged for something which does not actually exist. Thus usury is unjust: it is a scam, a theft, a something-for-nothing taking from the borrower.
Now the sovereign’s currency has credibility as a medium of exchange precisely because it is the currency that he will accept as payment for taxes. We engage in all sorts of transactions in the sovereign’s currency. (Contrary to the popular view, the sovereign’s currency is not mandatory for transactions: non-cash transactions are actually quite commonplace. But that is something of an aside from the present subject, I think). Usually – though not always – when a house is sold, it is sold for sovereign currency.
Anyway, the argument goes something like this:
Property taxes are denominated in the sovereign’s currency. However, the value imputed for the property tax rests on the mere potentiality of selling the property for its assessed value. There isn’t any actual sale transacted in actual dollars; there is merely a potential sale which does not in fact occur.
If it is intrinsically unjust to charge rent for something which doesn’t actually exist, it is also intrinsically unjust to tax what does not actually exist.