The Property Tax Debate

Football. I grew up not watching a single game. Now, I can’t wait for the season to start. I am far behind my peers in remembering names, records, and who won the award for most yards after sunset in 1997, but I am learning. Go Dawgs.

The property tax debate is heating up as Republicans search for hot-button issues that sound great on paper. Here’s the bottom line: our government needs revenue to function. The conversation around “canceling property taxes” tends to stop right there, cancel them, but rarely includes a serious plan for what replaces that revenue.

Sometimes I feel like I’m taking crazy pills trying to explain the second- and third-order effects of these policies. 

What are property taxes for?

Property taxes primarily fund schools, roads, police and fire departments, and other local government services. The idea is simple: the people most likely to use these services are the ones paying for them.

Because you pay these taxes to the government where you live, they directly support the schools your kids attend, the roads you drive on, and the emergency services you (hopefully never) need.

Who controls them?

Property taxes are local, levied by city and county governments and make up the largest source of local revenue—roughly 70%. Local governments:

• Assess property values

• Set rates

• Collect the money

• Spend the money

States create the legal framework: they define what’s taxable, set limits, outline exemptions, and regulate assessments.

Example: California’s Proposition 13 caps property taxes at 1% of assessed value and limits assessment increases to 2% annually. This means a house bought for $1M ten years ago might be worth $2M now, but the tax bill only reflects about $1.2M. When the property is sold, the assessment resets.

This is why you see neighbors in nearly identical houses paying vastly different amounts in taxes.

Why I Support Them

Unlike federal taxes, which fund things globally, property taxes stay local. The projects they fund are the ones you can see, use, and vote on. In fact, your vote matters more here than almost anywhere else.

Another reason I support them: They are essentially a progressive tax that doesn’t punish work. Income taxes increase as you earn more, but property taxes are tied to what you choose to buy. Don’t want a high tax bill? Buy a smaller or cheaper home. It’s more like a consumption tax, pay for what you use.

Are there flaws? Absolutely. Property taxes can hit lower-income homeowners harder as a percentage of income, and that’s worth discussing. But compared to other taxes, they give more control to the taxpayer. No tax is perfect, but property taxes are relatively efficient and minimize economic harm.

The “You Never Own Your Home” Argument

One popular talking point is that paying property taxes means you’re “just leasing your home from the government.”

Here’s the truth: You do own your home. You can sell it, give it away, destroy it, or neglect it. Property taxes don’t change that; they simply fund the services that make your property valuable in the first place.

Paved roads, fire departments, police protection, zoning that keeps your neighborhood desirable? All of these come from taxes. Don’t want to pay as much? Move somewhere remote where the land is cheap precisely because those services are limited.

If you really want to argue about government overreach in property rights, talk about permits and zoning laws, which truly limit what you can do with your property. That’s a stronger argument than “taxes mean I don’t own my home.”

I don’t like defending taxes any more than the next person, but we need a functioning government. If you have a better, non-regressive way to fund schools, roads, and emergency services without taxing work, I’d love to hear it.

Until someone shows me a better plan, property taxes make sense.

Want to see how your property taxes compare to the rest of the country? Check it out here.

Debrief on Deck

Next week, we debrief August, and oh boy, do we need to debrief. Trump went on a firing spree removing the head of the Bureau of Labor Statistics and is actively trying to remove a Fed Governor. Both these actions could have massive impacts to trust in our economic institutions - or - it could be fine. We will see.

As always, please reach out to us with any questions or comments you have. You can reply directly to this email or find us on Instagram.

Until then, stay the course.

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